About compliance
COMPLIANCE. Still an unknown concept for many of us. What is it and where can you meet it?
The term compliance comes from the English language and could be simply explained as being in line with applicable regulations and/or with other rules. In business, compliance is defined as a process or internal program that ensures that the organization, its management, employees and often also business partners, suppliers and other third parties, comply with all applicable international and European regulations, domestic laws, ethical rules and standards. In short, all rules that apply to the organization and its industry. This is, however, not a purely legal concept. For modern businesses, compliance should be seen as a natural part of their internal strategy and corporate culture.
Enforcing the “rules of the game” helps organisations prevent and detect breaches, protecting them from, for example, fines, litigation, but also other negative consequences or inefficiencies in general. Corporate compliance programs therefore aim to keep organisations operating legally, safely, responsibly and sustainably. Compliance programs consist of many specific areas such as competition, data protection and information security, corruption and bribery prevention, contract law, tax law, third party due diligence, conflicts of interests etc. An effective compliance program teaches employees to treat each other professionally and to uphold the company values in and out of the workplace. It also improves communication between the organization’s leadership and its employees. A key element of a functional compliance program is the ongoing identification and management of applicable risks.
In the Czech Republic, compliance is mainly associated with criminal liability of legal entities, due diligence, protection of personal data, as well as corporate social responsibility (nowadays better known as “ESG”). This is usually the basic motivation for the implementation of corporate compliance programs. Abroad, compliance is a fully established topic. In addition, the need to integrate compliance programs into foreign organisations has been spurred by the adoption of very strict anti-corruption laws with serious penalties for the individual breaches. Foreign models also suggest that, in the long run, a compliance program can be a significant competitive advantage that increases the value of an organization. This is because a modern and effective compliance program relies on the organisation’s own willingness to comply with rules and ethical values. In doing so, the organisation demonstrates its commitment and internal quality. This gives it credibility with external partners and makes it much more attractive as an employer to its employees.
