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Risks of Non-Compliance
The risks of non-compliance with statutory regulations can have massive repercussions. On the one hand, it affects the company’s original intentions of delivering quality service and value to the customers. Besides, it directly impacts the organisation’s financial position.
- Hefty fines await those who do not comply with regulations. These fines can erode the company’s profits and even wipe them out. Besides, companies can face lawsuits, with the settlements costing them millions of dollars.
- Non-compliance with regulations can affect the organisation’s market value and reputation, leading to loss of business opportunities because it paints them in poor light.
- Non-compliance can invite additional internal or external audits to determine the reasons, and conducting these audits is a time-consuming and expensive effort.
- Exceptional cases of non-compliance can result in compliance officers (or the personnel involved) facing regulatory and governmental enforcement action. It can be in addition to penalizing the organisation. So it serves as a warning for compliance officers to adhere to the regulations diligently.
- Repeated non-compliance with regulations can force the government authorities to shut down the defaulting companies.
- Non-compliance with food quality and safety induces a greater risk of contamination and affects the health of consumers. It can lead to bad publicity and the possibility of prosecution and cancellation of licenses. In addition, it can result in the imposition of testing and unit audits.
The prime objective of stipulating these regulatory compliances is to protect the customer’s interests and shareholder value. While it can be challenging to juggle multiple compliance regulations, non-compliance is not an excuse.