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Compliance and risk management are inter-related, They co-exist and are complementary. Compliance is meeting all regulatory requisites while risk management is knowing the risks and doing control to avoid or eliminate unacceptable risks.
Compliance and risk management are inter-related, They co-exist and are complementary. Compliance is meeting all governing regulatory levels while risk management is diagnosing the risks and find the right tool control even system upgrade or process improvement to mitigate risks in future
Compliance involves ensuring an organization follows established rules and regulations to prevent legal violations, while Risk Management is the proactive process of identifying, assessing, and mitigating risks that could impact an organization's objectives and includes both negative and positive risks. Compliance is more focused on meeting external requirements, while Risk Management has a broader scope, considering internal and external risks to an organization. While they have distinct purposes, they often intersect as effective risk management can help ensure compliance with relevant regulations and standards.
Compliance risk is integrity risk. Compliance regulations standardize business practices to maintain company's activities and ethical manner. Companies that fail to comply are posed to compliance risk such as financial loss, material loss, fines and reputation in the market.
Risk management is focusing on the risks as they pertain to strategic planning. The task is evaluating, and planning strategies pose new threats to the company.
Compliance is adherence to the regulations ascribed to a particular Industry or field of work. In Financial Services, for example, this means following both company policy as well as Regulatory policy, guidelines and, most importantly, Laws relating to the Industry. Theprocedures, policies and guidelines are to be in conformity with the Laws / enacted Legislation, and should be reviewed continuously and updated so as to be in line with existing and strongly proposed or soon to be implemented Laws.
Risk Management is to see/determine where the company or transaction, for example, may possibly infringe/or has infringed on the stated/existing or proposed guidelines/policies, and to set a course of correction to correct or reduce the loss/'fall-out' concerning same. If the potential for such risk could not be anticpated first so that there is Risk Mitigation (stopping the possibility of needing to manage the risk in futre), than the solution is to manage the risk. When doing so, one must look at what the problem/risk is, how long it has been a risk, what were the circumstances before it became a risk and after same, what are the potential time-frames for fixing the problem, if any, and how many solutions there may be to solve it. In looking at the solution, however, one must consider what further risks may be associated with the solution which could further exasperate the existing problem for the current period as well as into the future. Once sufficiently examined and planned for, the risk can now be managed.
Compliance and Risk Management: Interrelated, but Not the Same.
Compliance nanagement is managing the process to meet all regulatory and legislative requirements”.
Managing risk is not just about assessing and quantifying all the things that could go wrong, but, perhaps more importantly, understanding all the things that need to go right for the enterprise to be successful. Somehow we have descended into a culture focused on ferreting out all the issues that could contribute to failure to the point where risk management has become marginalized as overhead to the business process, not a contributor to its success.
