top of page

Impact of Non-Compliance in an Organization. Are you ready to take the risk ?

Compliance refers to rules, regulations laws and policies that an organization has to abide by. These compliance standards are very important and protect an organization and its stakeholders. Compliance's are particularly in alignment with the industry and the organization objectives. Compliance's may be organization specific like labor laws and quality standards or like safety guidelines, government regulations, etc.

Managing compliance's has evolved through the years with the increase in the complexity of compliance's. Compliance's these days are more dynamic in nature. With the increase in a number of compliance's, monitoring and predicting violations is now a major concern among businesses.

The cost attached to compliance's is increasing. The cost can be either monetary or non-monetary in nature. The consequences of non-compliance can affect a company negatively.

Following are some of the consequences of non compliance....

1. Penalties- Each non-compliance has some monetary penalty attached with it which a company has to pay. Some non-compliance's can be very costly for an organization.

2. The reputation of the company- A non-compliance issue can put a company in trouble and show it in a bad light. The brand value and reputation can take a serious hit based on the severity of non-compliance. This can also lead to further loss of opportunities.

3. Increased audits- Audits may have to be conducted to uncover the reason for non-compliance. Conducting these audits can be time-consuming and require a lot of efforts.

4. Imprisonment- In some severe cases, when critical compliance's are violated, the business owners may be imprisoned.

5. Company shut down- Governing authorities may sometimes order companies to shut down or completely dissolve them in case of serious non-compliance issues. Failure to comply is considered as illegal and the governing bodies may take any relevant action on the organization.

Here are some recent examples of how non-compliance impacts companies-

  • Hippa non-compliance in the healthcare industry- Hippa violations are highly risky and can prove to be costly to organizations. Hippa audits were delayed which led to non-compliance from many organizations. Non-compliance led to an increase in cyber attacks and loss of private confidential records. Anthem Inc data breach exposed 80 million records and the total cost was estimated to be more than $ 1 billion

  • Bank of America had to pay a penalty fee of $ 30 million violating the non-home loan compliance. remediation had to be provided to around 73,000 customers.

  • There are also various human resource violations that have costed companies dearly. Wrongful termination, age discrimination, racial discrimination are all regulated by policies and non-compliance in this regard can lead to hefty fines.

Rede consulting helps you implement, monitor, support the Governance, Risk and Compliance requirement of an organization. Feel free to consult our GRC team at

27 views0 comments


bottom of page