A short article on the website of the Corporate Executive Board (CEB, a member-based advisory business) notes changes in the past ten years in compliance work trends. It is no secret that greater government oversight of financial and ethical business standards in recent years has led to more compliance requirements.
This, in turn, has led to other changes in the nature and scope of compliance work. The CEB article notes, for instance, that compliance work is migrating beyond legal departments, sometimes to stand-alone compliance staff and even compliance “liaisons.”
Perhaps more significant, compliance staff are being asked to do more, especially “monitoring third-party controls, reviewing new business partners, assessing and mitigating risk.”
After all, compliance risks don’t stop within the walls of your company. In fact, compliance risks with third-party vendors outside your company are very real. Recently financial institutions such as American Express, Capital One and Discover Bank have had to pay hundreds of millions of dollars in fines to the Consumer Financial Protection Bureau for third-party vendor violations.
In light of these trends in compliance that affect businesses of all sizes, we think it’s only fair to point out what seems like the obvious (to us at least!): why aren’t you using contract management to assist with your compliance management?
Not every business has to hire and staff a huge department with hundreds of compliance workers. For many businesses, compliance management may be a task that requires a few key groups or staff to watch a few key areas of business. In a scenario like this, a contract management solution such as Contract Assistant can be a valuable tool in bolstering compliance-related work.
Note that one of the trends the CEB article identifies is to “do more” related to business partner and third party monitoring. A centralized contracts database helps compliance staff in several ways:
* An index of contracted vendors provides a one-source, definitive list of all extended business partners and suppliers. This can be valuable when compliance workers may not be aware of all the vendors and suppliers that exist beyond their departmental view.
* A contract management solution, such as Contract Assistant, encourages compliance-friendly tasks such as periodic contract reviews. A well-defined contract management process can result in contract review records stored or linked to contract records. If you were monitoring vendor compliance with industry regulations, wouldn’t you want access to contract review notes too?
* Those who manage contract databases and contract management solutions are a valuable source of information too. Compliance work staff may find that those who administer or manage a contract database solution know a good deal about important business partners and partner relationships.
Keep in mind we are not stating that a solution such as Contract Assistant is a regulatory compliance tool in itself. But a contract database is, at the very least, a roadmap and record of a company’s partner and vendor landscape.
We know it’s not unusual for even medium-sized businesses to have hundreds of active in-house contracts. In that case, shouldn’t compliance staff know the full scope of business relationships? If you have staff devoted to compliance, then you know the answer to that question already.