Short definition: Compliance refers to adhering to rules, regulations, laws, and ethical standards relevant to a business or industry.
Explanation: It involves ensuring that a company’s operations, processes, and employees follow all applicable laws, regulations, and internal policies. Compliance is crucial for maintaining a company’s reputation, avoiding legal and financial penalties, and promoting ethical business practices.
Example: In the financial industry, compliance may involve adhering to anti-money laundering regulations, ensuring fair treatment of customers, and preventing insider trading.
Additional information (optional): Compliance programs typically involve developing and implementing policies, procedures, and training programs to ensure adherence to applicable rules and regulations. Companies also often designate compliance officers to oversee these programs and conduct internal audits to identify any potential compliance risks.