With the constantly changing landscape of compliance in regulated industries and the continuous corresponding updates that ensue, adherence to a structured change management process to implement the inflow of new regulations on the production floor is imperative. This article points out the five important components that a compliance change management system should have.
A structured process is needed to capture all compliance items and associated regulations. Compliance changes are complex and come in various forms, including brand-new regulations, updates to existing regulations, and deletions of earlier regulations. Due to the complexity and frequency of regulatory updates, there must be a process for the compliance department to follow to identify and assimilate all types of compliance changes that happen within a businesses’ industry.
There are two methods a company may use to update its compliance management system: a) a manual method or, b) an automated method.
The manual process is tedious and needs a compliance team to observe any changes in the compliance landscape and incorporate them into the compliance system, one-by-one. On the other hand, the automated method offers a more efficient and manageable way to modify and update changes as they occur. Automation is especially beneficial for small to mid-sized companies that do not have organized compliance teams, or enough staff, to take on the additional workload.
This article will focus on the five steps of the compliance change management process and the associated process improvements needed to achieve change management in the compliance process.
- Use of Natural Language Processing (NLP), Semantic Analysis, and Data Extraction
To perform automated compliance updates, one must monitor the stream of new, modified, or obsolete compliance items from key regulators in an industry. Updates and changes come in various forms, such as documents, web pages, or news feeds, which are interpreted using natural language processing (NLP), semantic analysis, and data extraction rules based on pattern recognition. One challenge to automating the process is that most compliance documents come in either a PDF or Word format with no logical or repeatable organisation patterns, such as specific naming of sections, specific repeated verbiage for regulations, and so forth. Therefore, the automation system must follow a process like that of a human operator–using advanced language skills.
An added step may be necessary if compliance updates come in the form of an image or scan, requiring optical character recognition (OCR) in preparation for interpretation by NLP. The gains from automating these processes are huge as it frees up the compliance team to monitor rather than try to keep up with the huge volume of modified compliance items that may be flowing into their industry.
- Refining Compliance Items Once They are in the Compliance System
Once the new compliance items are in the compliance system, they undergo scrutiny, when necessary, by legal staff, subject matter experts, executives, and so forth, to ensure completion of all the preparatory work before releasing the production floor’s compliance regulation.
The size and depth of this project require a project management methodology. Utilizing a project calendar in which all responsible parties have access to, will ensure task completion, establish due dates, and identify key personnel handling individual tasks in the process. In addition to an organized project plan, an escalation protocol is in place to ensure that tasks are completed and implemented on time.
- Incorporate Compliance Items in Policy and Procedure Manuals
Once the pre-production steps for compliance modifications are completed, they are released and implemented on the production floor. The new change or additions/deletions are then placed in the policy and procedures manuals that guide the production staff, ensuring adherence to current compliance rules.
- Audit Implementation
While production implements the compliant production process, the audit team simultaneously updates their checklists and processes to ensure that they can properly quality control the proposed changes. The quality assurance function is also updated to ensure the effectiveness of the quality control process, and corresponding remedial corrective and preventative actions (CAPA), are implemented in both the production side and audit processes, based on the recommendations of the quality assurance team.
- Analyzing the New Compliance Item for Risk
With compliance production and audit working in tandem towards implementing the new compliance, risk management teams begin their risk analysis and mitigation exercise. Armed with the data produced from the first three stages, especially compliance item results from the quality control audits and quality assurance tests, risk management teams can analyze whether the risk exposure to the organization has been mitigated or not, based on this new compliance.
The risk group then assigns a risk mitigation score to any new compliance items. It creates a detailed report that shows the high-risk areas along with recommended actions for risk reduction. Recommended actions are proposed in the production audit at compliance levels. The nature and type of risk must be clearly detailed in the report, along with the risk priority.
The integration with a consolidated risk compliance and audit system is required to achieve a coordinated change management process for compliance implementation. This format offers all stakeholders of risk, compliance, and audit the ability to coordinate and manage their activities in a synchronized fashion to achieve risk reduction in the organization and compliance adherence. The system should function as a workflow engine and project management module. Regardless of the organisation’s size, operating with the focus on simply adding more people to the compliance, audit, and risk department, without thinking through well-coordinated change management and process automation, is unsustainable.