Opinion: Why it's time to rethink the cost of compliance
It’s easy to look at compliance through the lens of its impact on a business’ bottom-line, but there are bigger costs at stake, writes Jeanne Koch Rasmussen, Business Development Director at Impero.
An average of USD $5 million.
That’s the magic number most companies are looking for when they want to know the cost of compliance to companies around the world.
Yes – it’s high, and yes – it’s rising.
But – even as every company and every household try to do more with less this year – there are bigger questions to ask.
I’m not just thinking of the cost of non-compliance (which, for reference, is almost three times the cost of strong compliance processes).
In Denmark, recently rated the world’s least-corrupt country by Transparency International, we can almost take for granted that trust and transparency are implicit in the way we do business. We can almost take for granted that companies and individuals comply with their tax obligations. And we can almost take for granted that reports that companies submit for factors like ESG are true.
But what if this wasn’t the case?
It’s not actually hard to picture. There is a litany of examples that show just what happens.
The headlines. The criticism. The consequences.
Yet these too limit the conversation we should have about compliance.
Of course, protecting your business’ reputation, staying off the front page for the wrong reasons and avoiding paying costly fines, are central on the minds of C-Suites. But the conversation is bigger than this.
Jeanne Koch Rasmussen
Business Development Director, Impero
If it happens once, there’s an impact on the individual or the company. But if it becomes endemic enough, the consequences can cut far deeper across society.
It limits economic development, because there’s not the same tax take to invest in services to move the needle. It degrades trust in organizations that can help us through challenging situations like the pandemic. And it means that each of us is left a little less incentivized to contribute to transparency, because why would you bother when no one else is?
Put another way, having quality compliance processes enables us to live up to the standards we set for ourselves.
The kind of standards that see us at the top of lists like those from Transparency International. They also allow future generations to continue to raise the bar of what we expect of companies and citizens in our society.
That’s why the compliance conversation should go beyond the just costs and the consequences.
It should be a celebration of the contribution each of us make to a society. A society which functions well thanks to the contributions we all make. A society which makes us proud.
And as a society we all must protect it by doing our bit. Because not doing so is a cost we simply cannot afford.
