Every business, whether a big corporation or a startup, must adhere to certain laws and regulations in the jurisdiction they operate in. The practice of adhering to such regulation is what is often regarded as regulatory compliance. This brief article highlights why regulatory compliance is important and how startups can implement an effective regulatory compliance plan.
As reiterated, regulatory compliance is when businesses follow state, federal, and international laws and regulations relevant to their operations. Some examples of regulatory compliance regulations include the Bank and Other Financial Institutions Act, the Companies and other Allied Matters Act the Petroleum Industry Act 2021, among others.
Over the past few years, the volume of laws, regulations, guidelines, and standards has increased exponentially. Compliance isn’t just for the financial services sector, it touches virtually every industry and has become a vital part of operations.
As a founder, when you fail to comply with the necessary laws and regulations, you put your business at risk. You open yourself to potential lawsuits and fines. According to a recent study of cyber breach cases in the U.S., U.K., and Canada, the number of cases and total losses (penalties and settlements awarded) associated with those cases are rising sharply. In just one year (2017-2018), the average cost per case jumped nearly two-thirds, from $4.4 million to $7.2 million.
Regulatory compliance also helps you protect your reputation and build trust with customers and investors. Ensure you hire an attorney to stay compliant.