What small businesses need to know about compliance

Why do you need a GRC system?

If your business has risks to manage, then you need to think about a GRC system. 

A GRC system helps you identify and mitigate risks before they become a problem. It ensures your staff operate ethically, limiting your exposure to risky behaviours that can lead to expensive breaches and penalties. 

Done well, your GRC system brings clarity to your business. In contrast, a poorly considered system can end up adding to your workload while consuming valuable time and money.

The first step is to understand that GRC isn’t a one-off activity. Instead, it’s a framework that needs to be woven into the fabric of how your business operates, generating important compliance data to guide day-to-day decision making, right across your business.

The next step is to think carefully about the key risks you need to manage. Here are six common risk areas to consider. 
 

1. Protecting customer privacy 

There are a growing number of international laws, including the EU’s General Data Protection Regulation (GDPR), that regulate the management of people’s personal information. 

In Australia, the Corporations Act specifies who can be contacted and for what – particularly the anti-hawking and anti-spam provisions. Running afoul of the Act can result in stiff penalties and fines. 

Processes and controls can ensure data security and limit your risk. They can be deployed across your business, or focus on specific, high-risk areas like Marketing and IT.  
 

2. Meeting your obligations to your staff

Human resources is a sensitive area that carries significant legal requirements. Mismanaging it, even by accident, can leave a business liable. Yet managing complex awards and contracts, including legacy agreements, can be challenging. 

You need to ensure that you are providing mandatory minimum benefits, including payroll and superannuation contributions – backed by robust documentation.
Outdated legacy HR technology systems can make hiring and dismissing employees more complicated. A GRC strategy gives you greater visibility and helps to limit your risk. 
 

3. Complying with your industry's licence conditions and regulations 

Many industries have specific regulatory frameworks, governing everything from food quality and hygiene, to building standards. Ensuring your data is easy to understand and analyze helps you when you report to the relevant agencies, protecting you from legal risk. 

Tracking your licenses and permits – along with their expiration dates – prevents key person risk resting on the employee with custody of the dates and passwords.
 

4. Keeping on top of your taxes and reporting

Complying with various tax requirements can quickly become overwhelming. GRC software can help you track your key dates and your taxes by type, from payroll tax to fringe benefits.  It can also help support your record keeping so that you can meet your obligations. 
 

5. Ensuring workplace health and safety

You are responsible for providing a healthy and safe work environment for both your employees and anyone who comes into contact with your organization, including customers, contractors and suppliers. 

Tracking incidents can help you understand unsafe or potentially problematic areas of your business. Addressing these can limit future liability. And administering workers compensation policies is essential in the event of anyone becoming ill or injured in your workplace. 
 

6. Treating customers fairly  

Operating a consumer-facing business means you must comply with consumer laws and codes of practice to ensure fair trading and customer protection. GRC systems can help you understand both existing consumer laws and adapt as they change, to ensure you’re complying with current legislation.
 

Four benefits of a GRC system

A strong GRC compliance framework not only helps you manage risk, safeguarding the value you’ve created. It can also help you add value, creating a more resilient and efficient organization that will be more attractive to potential employees and even potential buyers. 
 

1. Improve efficiency

An effective GRC system can improve communication between key stakeholders and help take the guesswork out of decision-making. The right software can help automate compliance monitoring and reporting – reducing errors and significantly cutting the time you spend filing reports and collating data to assess threats and opportunities. 
 

2. Get better data

A strong GRC system can generate valuable business insights – from the effectiveness of your marketing to the use of customer data. This will help you make smarter business decisions, as well as anticipating and correcting issues before they become more significant problems.
 

3. Cut costs

Improved efficiency means your staff can spend less time on administration and more time focusing on your business goals. Your business will perform better and your staff will be happier, too.
 

4. Increase the value of your business

When it comes time to realise the business value you've worked so hard to create – either by merging with another firm or selling to a new owner – a GRC system can boost your equity. That’s because GRC not only shows that you are operating ethically and meeting your compliance obligations, it also simplifies the due diligence process, providing data that makes the valuation and sale process easier.