In any business, managing legal and regulatory compliance is essential to safeguarding your operations from potential risks, fines, and reputational damage. While financial metrics can help you track the costs associated with compliance, they don’t provide a complete picture of how effectively your business is adhering to directors’ responsibilities and other regulations. To gain a more comprehensive understanding, it’s crucial to track non-financial key performance indicators (KPIs) that reflect your business’s compliance health and risk management practices.
Non-financial KPIs offer valuable insights into your compliance processes, employee awareness, and the effectiveness of your risk mitigation strategies. By closely monitoring these indicators, you can identify areas where your business may be vulnerable to compliance issues, take corrective action, and ensure that you remain in good standing with regulators and clients alike. This proactive approach helps you avoid legal pitfalls, protect your business’s reputation, and maintain smooth operations.
Below, we outline the most critical non-financial KPIs that your business could track to better manage legal and regulatory compliance. By focusing on these key metrics, you can ensure that your business adheres to all necessary regulations, minimises risk, and operates with confidence and integrity.
Suggested Non-Financial KPIs for Managing Legal and Regulatory Compliance
What It Measures: The percentage of directors and other team members who have completed mandatory compliance training within a specified period.
Why It’s Important: A high completion rate ensures that your team is well-informed about legal requirements and company policies, reducing the risk of non-compliance.
What It Measures: The number of internal or external compliance audits that your business passes without major issues.
Why It’s Important: Successfully passing audits indicates your compliance processes are robust and effective, reducing the likelihood of regulatory penalties.
What It Measures: The time it takes to report and resolve any compliance-related incidents or breaches.
Why It’s Important: Quick resolution of compliance issues minimises potential damage and shows that your business takes legal responsibilities seriously.
What It Measures: How often your company policies are reviewed and updated to reflect changes in laws and regulations.
Why It’s Important: Regular policy updates ensure that your business stays aligned with current legal standards, helping you avoid compliance gaps.
What It Measures: The level of understanding employees have regarding the company’s legal obligations and compliance policies, often assessed through surveys or assessments.
Why It’s Important: High awareness among employees reduces the risk of accidental breaches and promotes a culture of compliance within your organisation.
What It Measures: The percentage of your vendors, partners, and contractors that meet your business’s compliance requirements.
Why It’s Important: Ensuring that third parties comply with legal standards protects your business from indirect risks and liabilities.
What It Measures: The level of understanding employees have regarding the company’s legal obligations and compliance policies, often assessed through surveys or assessments.
Why It’s Important: High awareness among employees reduces the risk of accidental breaches and promotes a culture of compliance within your organisation.
What It Measures: The degree to which your business adheres to data protection regulations, particularly the General Data Protection Regulation (GDPR).
Why It’s Important: Ensuring full compliance with data protection laws is crucial for avoiding significant fines and maintaining client trust.
What It Measures: The accuracy and completeness of reports submitted to regulatory bodies.
Why It’s Important: Accurate reporting is essential for maintaining compliance and demonstrating your business’s commitment to transparency and accountability.
What It Measures: The frequency with which the same compliance issues or violations occur within your business.
Why It’s Important: A low recurrence rate suggests that your corrective actions are effective, and that similar issues are unlikely to reoccur, reducing ongoing compliance risks.
As with all KPIs and goals in general, ‘less is more’, so ideally you will select the handful of KPIs that are of greatest importance to the business to track and report on at top-level management. The further down the organisation you go, some of the more granular KPIs are likely to be ideal for middle or junior-level management and, of course, for team members.
For a much more comprehensive list of Key Performance Indicators for managing Regulatory Compliance, Minimising Risk and much more, please click the link below.
Click Here for a More KPI’s for Managing Regulatory Compliance and Risk, and Much More
In summary: By regularly tracking these non-financial KPIs, your business can gain a comprehensive understanding of how effectively it is managing legal and regulatory compliance. These insights will enable you to make informed decisions that ensure your business adheres to all necessary regulations, minimises legal risks, and operates with confidence and integrity in a complex regulatory environment.
Note: We are not advocating that you include ALL of the above KPIs on your website, you should select those you feel are most appropriate and enclose a link to a pdf that requires the site visitor to provide their email address to access a more complete list, that then gives them the full list above.
Another consideration: You do need to ensure anyone in your organisation that may end up talking to clients knows enough about the KPIs listed to be able to talk knowledgably about them to provide clients with a consistent, reassuring and professional experience.
