Corporate counsel still considers regulatory compliance to be one of the greatest challenges with risk management. With recent developments where risk is associated with regulatory action, legal departments face more challenges than before.
Compliance with best practices pushes global organizations to develop their risk management frameworks. This impacts several internal departments and legal processes according to the various regulations. Regulatory compliance affects best practices of the whole company. Therefore, it must be considered according to what is considered legal and with a broader scope.
To overcome these challenges, there must be in-house legal teams, risk management protocols and policies, and operational business departments. All these teams must work hand-in-hand so that their contributions to management benefit the whole enterprise. In addition to these challenges, global organizations must provide guidance and advice about ethical issues, regulatory compliance and risk management strategies.
1. Extent of Regulatory Change: The extent of alterations in regulation has increased over the past few years. This is particularly obvious in the US, UK and Europe. The main challenge is to ensure adaptation to the regulatory alterations. Failure to do this will be a waste of resources and time.
2. Records/Accountability: Accountability of a company plays a major role in global organizations. There has to be control and management of regulations.
3. Cultural Differences: Global businesses meet differences in traditions across the globe. There is need to adapt to these changes within the shortest time. Failure to ensure compliance with new cultural believes becomes an obstacle for the success of international businesses. Adapting to cultural differences helps with risk management.
4. The Market: Uncertainty of the market and over regulation of financial sectors continues to damage and reduce shareholder value.
5. Global Reach: Due to political limitations, there may be times where global businesses will face constraints. This may damage customer and shareholder perceptions. This is particularly visible in international markets like Brazil, China, Russia and India.
6. International Reputation: Reputation is of particular importance. Mitigating the risk of losing reputation is perhaps the greatest of challenges. This is because there are a number of factors that affect international reputation.
If these challenges can be met, global organizations will succeed and earn international recognition through best practices.