Compliance has become increasingly important over the past decade – introduction and enforcement of regulations such as SOX, HIPPA, and PCI DSS has established a new standard for expected company behaviors, operational transparency, and consumer protection. As these practices become prevalent, private organizations are adopting them to comply with this level of expectation.
Why Are Organizations Doing This?
While private and not-for-profit organizations are not actually required to comply with regulations that govern publicly traded organizations, there are many benefits to doing so. These organizations are motivated by a number of different factors, including the following:
- Copycat laws. Some businesses expect that legislation will be put into place that mimics the standards required by compliance legislation. These organizations have begun complying with current regulations in an effort to be proactive about this potential legislation.
- Transparent business processes. Many organizations have come to realize that compliance regulations provide a practical framework for better business processes. SOX, for example, provides a series of guidelines that improve accounting, financial reporting, and corporate governance.
- Pressure from third parties. Organizations that rely on lenders and insurers, do business with government entities, report to federal regulators, are planning to go public, or consider themselves acquisition targets are being encouraged by outside sources to follow reporting and internal processes found in IT compliance regulations.