Regardless of industry, location, size, and revenue, all businesses are subject to legal compliance — tax laws, PCI standards, regulation SCI rules, FIS MA regulations, FCPA rules, or HIPAA privacy standards — in order to protect their operations, employees, and customers. After the 2008 financial crisis, establishing and maintaining effective compliance has grown in importance, especially in order to avoid the financial and operational consequences of non-compliance. Even though compliance is increasingly becoming a focus point for companies around the world, maintaining regulatory compliance is still an area of risk and various challenges exist in effectively meeting all regulations on a regular basis. Many companies do not fully understand their legal obligation; continue to promote unorganized and non-compliant business processes; use unstreamlined data backup procedures; and may be unprepared for legal audits.
However, more and more companies are turning to robotic process automation (RPA) to overcome such challenges and to help them improve their levels of compliance. This begs the questions: how can RPA support the legal considerations of companies, and what are the legal benefits of implementing this automation technology? In this post, we’ll consider the importance of legal compliance and how RPA can be used to achieve higher levels of compliance than ever before.
Importance of compliance
Allen & Overy a London-based international law firm, suggests “against an increased level of regulatory scrutiny and ethical expectations, and given the financial and reputational damage that results from corporate scandals, compliance has moved up the corporate boardroom agenda. As a result, ensuring compliance with both local and international laws should be part of the ordinary, day-to-day activities of a company.”
Compliance with legal regulations is not a one-time responsibility, meaning that it must be an integral part of a day-to-day operations. By maintaining regular and strict compliance with the applicable laws and regulations, business can attain advantages such as:
Reduced legal issues
Not all instances of noncompliance come with the same caliber of consequences, however they typically all come with some sort of penalty, whether it is a warning for not posting an employment poster in a common office space or lawsuit for failing to pay federal taxes. By complying with the applicable laws and regulations, companies reduce their risks of monetary fines, lawsuits, and even business closure.
Better business operationsWhile they may seem tedious and burdensome, legal obligations exist for a reason: to introduce internal safeguards and promote stronger company operations. Laws that promote data security and protection, for example, help maintain confidentiality, prevent financial loss, and avoid malware intrusion.
Improved employee and customer retentionBy meeting legal obligations, companies foster a protected, safe, and professional business environment for both employees and customers. Companies can even promote their compliance in their mission statement, on their website, and in their marketing materials. Employees and customers are, as a result, much more likely to interact with a company that supports legal compliance that compromises their security and privacy.
How RPA can assist with compliance
Many companies are turning to RPA in order to support and maintain more robust and effective compliance programs. More specifically, RPA can help companies achieve the discussed benefits — reduced legal issues, retention of employees and customers, and improved business operations — through the following contributions:
- RPA allows businesses to be in control of executing their own operational processes internally and is becoming an increasingly viable alternative to outsourcing and offshoring. During the automation process, RPA software robots’ actions are saved into a log where they can be reviewed and monitored at any time. This means that companies have a greater degree of oversight and control over their own operations, and employees can deal with compliance issues more easily if they arise.
Higher levels of compliance
- Once a process is established as an automated workflow with RPA, it is executed in the same way every time without any errors, regardless of whether the process concerns data transfer and migration, invoice processing, or purchase order issuing. This means that RPA allows companies to establish unparalleled levels of process accuracy, especially compared to the work that can be done by human employees. Consequently, companies can better maintain high levels of compliance of all business processes.
Increased auditabilityWhile they do not necessarily occur on a regular basis, audits of a company’s legal compliance are possible, and passing these is critical for the success of every business. Because RPA software robots are able to save their actions into an activity log, companies will be prepared for an external audit, if and when the time comes. This log file provides the process information necessary (which process were executed and how, when exceptions were generated, and the ways in which employees intervened to deal with issues) that is needed for an audit.
In a recent Forbes Magazine article titled Robotics: The Next Frontier For Automation In Finance And Risk Management, author Steve Culp, senior managing director of Accenture Finance and Risk Services, suggests that authorities regulating legal compliance are welcoming of the implementation of robotic automation technologies, such as RPA, precisely for the significant benefits they provide to both businesses and their employees.
Culp further elaborates that RPA software robots will drastically improve the capabilities of employees in their efforts to secure their company’s compliance with laws and regulations: while “the rapid adoption [of RPA] is almost inevitable, leading firms will use it as a way to not just reduce costs, but also to improve controls and improve the effectiveness of their people, making them more productive and valued within the organization.”
Going forward, it is important for all companies to maintain a balance between software robots and employees, especially when maintaining legal compliance. Each are able to contribute to the improvement of business processes and optimization of regulatory compliance in different ways: RPA is able execute back office business processes more easily, while employees are depended on for the contributions they can make to optimizing these processes. Together, a company’s RPA software robots and employees will help to drive regulatory compliance, avoid the consequences of non-compliance, and deliver improved operational outcomes.
Nick Ostdick is a Digital Content Strategist.