Comparing and Contrasting: Risk Management vs. Compliance

Compliance is sometimes used interchangeably with security – while those concerns are related, they are not the same. Another term commonly confused with compliance is risk management. 

Let’s examine the topic of risk management vs. compliance, including their differences and similarities, why a business needs each, what needs to be done for each, and how both are accomplished.

Analyzing Compliance and Risk Management

To be fair, risk management and compliance are very closely linked. Compliance with rules and regulations helps protect businesses from many risks, while risk management helps limit various risks that can lead to non-compliance.1 

It is said businesses are in compliance when they adhere to a set of rules, policies, standards, or laws. Regulatory compliance is realized when organizations have taken necessary steps to ensure they are always aware of and have complied with state, federal, or international laws, policies, and regulations.

And with respect to technology, compliance means that a business is using advanced technology solutions to ensure all sensitive information is protected and managed in a way that keeps it private

Effective risk management differs from compliance in that the organization must satisfactorily address the exposure, quantity, quality, and likelihood of risk that it may face. Further, it must identify, prioritize, and assign accountability for managing potential legal and compliance threats.2 

 

The Whys and Hows

The reasons why businesses need to be in compliance are pretty straight forward – mainly because it’s required by law and by industry regulations. Beyond that, the ramifications of not being in compliance are heavy fines and ongoing legal hassles.

But for risk management, that’s not as easy to answer or as clear. Every company faces risks that may include unexpected events causing reputational harm, financial losses, and/or permanent closure. But by planning for the unexpected and creating an effective risk management policy, organizations can attempt to curtail the ramifications of risk by minimizing them and potentially reducing the costs before they actually happen

For the questions of what businesses need to do or how they can succeed in these endeavors, they simply need to spend time and money on creating positions that oversee the compliance and risks or add these responsibilities to a particular department, such as human resources or legal. For SMBs, many choose to outsource these responsibilities to an MSP that either specializes in these tasks or has substantial experience in handling these types of issues. 

Lastly, you should know that compliance and risk management can be accomplished simultaneously if you have help from the right risk management / technology MSP partner.

 

Rely on Our Compliance & Risk Management Expertise

Now that you have a better understanding of risk management vs. compliance, you may realize your business can use assistance in one or both areas. To help your organization with these potentially tricky subjects, we’ve created a new compliance as a service offering that is helping many companies navigate these choppy waters. Additionally, we’ve got quite a few webinars devoted to these two subjects scheduled in October 2021 that you can sign up for, and also a few past webinars that you can view anytime at your convenience. Check out our webinar landing page to sign up and view the webinar titles that interest you, or start by downloading our Compliance as a Service Guidebook by filling out the form below.

If your organization isn’t sure if you’re in compliance or not and needs help formulating a thorough risk management policy, we can help. Contact us, and one of our professionals will set up a consultation to see where you are today and where you could go with our help. 

 

By Natalie

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