What is the Difference Between Compliance and Risk Management?

Non-compliance and a lack of risk management planning can be very problematic for any company. Non-compliance can lead to hefty fines and severe penalties in some cases, while a lack of risk management can lead to organizational chaos in the event of a cyberattack. In 2015 alone, penalties for compliance violations cost businesses about $60 million.

It’s crucial for organizations of all sizes to have optimized compliance and risk management strategies in place. But what’s the difference between the two?

We’ll review the differences and similarities between the two and explain how implementing both in your company can keep it protected.

What is Compliance?

Compliance is a set of measures that a company takes to ensure that it’s in agreement with industry regulations, laws, and standards. Compliance is an essential element for all businesses because it helps protect them from legal penalties and sanctions.

Additionally, compliance can help businesses maintain a good reputation and avoid costly fines and lawsuits. Compliance success is also best evaluated with functional measuring tools.

What is Cybersecurity Risk Management?

Cybersecurity risk management is the process of identifying, assessing, and responding to threats to information and information systems. It’s valuable for businesses to have a strong cybersecurity risk management plan in place because it helps protect them from digital threats.

Risks to systems can come from a variety of sources, including hackers, malware, and accidental data breaches. By identifying and assessing these risks, businesses can take steps to mitigate them.

Compliance vs Risk Management: Similarities and Differences You Should Know 

While both compliance and risk management are important protocols for companies to include in their processes, it’s important to know what the similarities and differences are between the two.

Similarities

Compliance and risk management are two important aspects of any business. Both aspects focus on protecting a company from potential harm. Compliance helps protect a company from legal penalties, while risk management helps protect against cyber threats and other risks that have potential to damage a company.

Both compliance and risk management require careful planning and execution in order to be effective. They can help a company avoid costly fines, lawsuits, and other liabilities.

Differences

While both compliance and risk management share some similarities, they also have distinct differences. Compliance is typically more reactive, while risk management is proactive.

Risk management typically includes a wider scope than compliance. The plans for risk management often assess a variety of risks, including financial, operational, and reputational risks. Compliance plans tend to be more focused on specific regulations and laws.

Compliance is typically mandatory, while risk management is often voluntary, albeit strongly recommended. In some cases, certain compliance measures may be required by law. Risk management is often seen as an additional measure that companies can take to protect themselves.

Is Compliance Alone Enough to Keep Your Organization Safe?

Even though compliance is an important part of any business, it’s not always enough to keep them safe. While compliance helps protect companies from legal penalties and sanctions, it doesn’t always help protect them from cyber threats and other risks the way risk management can.

Risk management is a proactive approach that can help businesses avoid potential damage from digital threats. By implementing both, businesses can keep themselves safe from a variety of risks. Vigorous cybersecurity should be a top priority for all businesses, and incorporating compliance and risk management can help them achieve that goal.

Partner with Envision Consulting for Help with Compliance Standards AND Effective Risk Management

Maintaining compliance with industry regulations and standards can be difficult for businesses. There are often new regulations and changes to existing regulations, which can make it hard to keep up with the latest requirements.

And in order to have an effective risk management plan in place, businesses need to continuously assess and reassess their risks. This can be challenging, especially for businesses that don’t have experience with risk management.

Contact Envision Consulting today and see how we can help businesses with both compliance and risk management. We keep up with the latest changes in regulations so you don’t have to. We’ll assess your specific risks and develop an effective plan to mitigate them.