6 Types of Compliance Risk
John Spacey, August 27, 2015 updated on March 23, 2021
Compliance risk is the potential for losses and legal penalties due to failure to comply with laws or regulations. In many cases, businesses that fully intend to comply with the law still have compliance risks due to the possibility of management failures. The following are a few examples of compliance risks.
1. Environmental RiskPotential for damage to living organisms or the environment arising out of an organization's activities.
2. Workplace Health & SafetyRisks related to all aspects of health and safety in the workplace such as accidents or repetitive strain injuries.
3. Corrupt PracticesThe potential for corrupt practices such as bribery or fraud. Organizations are generally responsible for the actions of their employees and agents in this regard.
4. Social ResponsibilityThe risk that your business activities will harm your workers or the people in the communities in which you operate.
5. QualityReleasing a low quality product or service that fails to meet the expected level of due diligence in your industry or that violates laws and regulations.
6. Process RiskThe risk that your processes will fail resulting in legal violations such as failure to meet your responsibilities to your customers or partners. Process failures can also result in reporting or accounting errors that breach your duties to your investors.
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