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The following are illustrative examples. Product Specific Examples. But how do compliance teams move beyond using their risk registers as a punch list, to leveraging it for critical context in reporting their effectiveness? Using needs analysis and risk assessment, you can identify your current compliance program effectiveness and then build your program based on the business objectives you’d like to achieve. May be referred to as “downtime.”. Translating KPIs from technical to business language enables better compliance decisions. Not all the examples will fit your program. To truly optimize effectiveness and facilitate continuous improvement, context and deeper analytics of the data are needed. This compliance ensures senior management has the complete and accurate data needed to harvest insights effectively when reviewing compliance KPIs. Compliance KPIs help companies develop effective compliance programs supported by intelligent risk assessment. After all, isn’t that the point? However, given the ambiguities of this terminology, it is not always evident to débutants how these types may be characterized and used. Designed to consume resources with maximum efficiency. Rather, compliance professionals should carefully discern which key metrics most directly apply to their own organization. Greater operational efficiency and productivity. Add in industry regulations, internal controls and compliance policies, and the need to comply with third-party requirements such as green business certifications or Energy Star regulations, and the average compliance team can find itself lost in wave after wave of data pouring in from countless sources. Total Compliance Operating Expense – The total yearly operating cost for compliance. Number and type of sanctions applied by incident type, location, business unit, organizational title, employee demographics, etc. Cybersecurity benchmarking is an important way of keeping tabs on your security efforts. Developed and implemented consistently across the organization. Governance, risk and compliance KPIs help to measure the organisation’s governance in terms of risk, social responsibility, compliance, environmental responsibility and sustainability, on different levels. One of the most important areas where KPIs are used is compliance management. HR Cost 1. North America Compliance Metrics/KPI’s - DRAFT [revised 3/2/09] To be reported by each BU/BL/SU (directly or indirectly (e.g., through ESH KPI’s)) quarterly: KPI Description: Effort devoted to Compliance* training: Metric: Number of hours in compliance training / employee ), Trends between type of misconduct and the. by Jim Nortz. Compliance performance superstars are made, not born. Metrics help to demonstrate the “ris k tolerance” of an organization. Supplier Defect and Compliance Rates: Ratios of accurate and contract-compliant orders completed, respectively. Digital disruption has shifted global economic priorities and fundamentally altered the ways in which companies approach everything from strategic decision-making to business process optimization to risk management. “A specific set of metrics designed to measure how well an organization’s compliance department is maintaining that same organization’s compliance with internal and external policies, along with industry and government regulations, compliance KPIs are essential to protecting your business and helping it expand beyond its current capabilities.”. How KPIs and Metrics Can Help Measure Security Compliance. You need to be tracking cybersecurity metrics for two important reasons: Relationships between policy attestations and training completion/certifications, Impact of policy rollouts on misconduct reporting rates, Impact of incentives and communication initiatives on policy engagement and understanding. Compliance KPIs can be implemented as an early warning system to detect potential compliance issues, and help the business move quickly to implement controls or other measures to prevent regulatory action, bad publicity and/or employee dissatisfaction. In procurement, rogue spend, lack of training, and non-compliance with procurement policies can obscure the data essential to effective spend management and financial planning, making it difficult to maintain adequate cash flow, capture value and savings through strategic spend, or build a resilient supply chain to protect business continuity. Purchasing compliance. New risks to profitability, reputation, and compliance appear with frequent (and frightening) regularity, and the costs that come with assessing and managing these risks can be daunting. Yes, these metrics are driven in large part by the expectations set out by the Federal Sentencing Guidelines—but I’d argue that in their most basic form they follow the Guidelines in letter, not spirit. Step-by-Step Guide: 8 Steps to an Effective Compliance Programme. a compliance issue, for example, then it is clearly essential that those are remedied. Many of the metrics seek to measure the "culture of compliance," a phrase used frequently by New York's Office of the Medicaid Inspector General, in order to gauge the understanding of, and adherence with, compliance obligations among staff. This presents obvious problems for a program’s defensibility: If you don’t know if or how well your compliance initiatives are working, you’ll be hard pressed to defend or improve your program. Data storage and management compliance. Here are some overly broad and ambiguous metrics that many compliance teams still track—and some suggestions for how to make adjustments or add context to improve their value and utility. Regular reporting of HR metrics is a good tool for managing any Human Resources department. Drawn from practices and benchmarks informed by needs analysis. When you choose a metric, make sure you ask, “So what?” If you can’t answer why the metric matters, or what the goal is for that metric, choose something else. Certain compliance metrics may also be referred to as Key Risk Indicators, or KRIs. Number of disclosures submitted after conflicts of interest or GT&E training, Impact of training rollouts and results on hotline trends, Impact of incentives and communication initiatives on training engagement and understanding, Policy distribution and attestation trends for key risk areas. Following a few best practices will strengthen your compliance policies and ensure you’re making optimal use of the compliance metrics you’re tracking. The term key risk indicators (KRIs) is also used for some compliance metrics. When evaluating your current compliance ecosystem, your ranking system might look something like this: Having everything in black and white not only makes it easier to train your team to follow your new compliance policies and protocols, but also provides a concrete, audit-friendly record for internal and external review. Greater consistency and compliance across the entire organization. Incident drivers to differentiate misconduct that was intentional, rationalized, unwittingly committed, driven by pressure/compensation and any correlations between drivers and risk areas, locations, business units, organizational titles, etc. Before you can get your compliance program up and running, you need to know where your organization currently stands with regard to compliance. As one of the most fundamental components of even the most nascent compliance programs, CCOs often report on the number and topics of the courses they’re distributing, completion rates and the results of any related comprehension tests or knowledge assessments. The Best Compliance KPIs to Track: Benchmarking and Metrics, Governance, Risk Management, and Compliance (GRC). Understand key points of an organizational risk profile and risk intelligence and how they interact with compliance program metrics 3. Centralized, cloud-based data collection and management. When everyone’s on the same page (so to speak), financial, operational, and regulatory compliance are greatly improved. Only then can compliance move from a highly reactive function to one that’s cohesive, predictive, proactive and preventative in nature. Percentage of Post-Audit Issues Outstanding: Total issues still outstanding after completion of an audit, expressed as a percentage. Let’s take the executive KPI of % SLA Compliance and determine how it can be composed of management level and operational level ones. Percentage Difference in MBTF: Comparison of failure rates across different systems or units of equipment, expressed as a percentage. List common criteria for measuring achievement to goals through appropriate metrics. Every other function—from finance to sales and operations to HR—continually monitors, reports on and is held accountable for in-depth analysis of their performance. No two organizations will share identical priorities with regard to risk mitigation, but businesses of all sizes can benefit from a compliance program built around measuring, evaluating, and adjusting workflows and policies with the help of compliance KPIs. Much like their counterparts in the procurement and accounts payable (AP) functions, compliance professionals rely on clear, accurate, and complete data to perform their jobs effectively. Compliance KPIs can be considered “watchdogs” or “early warning systems” for potential risk exposure. COMPLIANCE METRICS HANDBOOK WHY COMPLIANCE INSIGHTS MATTER HOW TO BUILD A METRICS-FILLED BOARD REPORT HOW DO YOU MEASURE EFFECTIVENESS? I’m continuously struck by the compliance industry’s challenges around program measurement and reporting. Percentage Difference in MTTR: A measure of changes to MTTR as an indicator of relative efficiency, expressed as a percentage. HR Cost per Employee How much is the company spending on HR? With limited resources—and facing increasingly high stakes, expectations and scrutiny levels—compliance teams can’t and shouldn’t waste their time compiling and analyzing data that won’t ultimately help them make better compliance decisions. Examples of metrics to track to ensure HIPAA compliance include: Data-driven, forward-minded, and dedicated to optimization across all business processes using continuous improvement, today’s business leaders need effective risk assessment and risk management tools if they want to stay ahead of the competition. 2. Total Number of Compliance Issues Currently Open, Total Number of Open Employee Relations/Human Resources Issues. Using Metrics to Measure Compliance Effectiveness. We just need some information from you so our specialists know how to assist you better. Watch the recorded CONVERGE20 Sessions on-demand in the Converge Community. The following are common examples. Ensure everyone across your organization has access to thorough training in your compliance programs, with updates and refreshers as needed. A compliance management solution such as PurchaseControl, for example, provides intuitive and flexible tools that support the creation, monitoring, and refinement of your most important compliance KPIs through: When companies track and refine their compliance KPIs effectively, they can expect: To address compliance issues effectively, senior management needs a compliance program that not only identifies potential risks, but helps ferret out and correct their root causes. Issue trends by location, business unit, organizational title, employee demographics (tenure, salary, etc.) Some Compliance Metric Examples. Ideally, your compliance team will use KPIs that are: Every business is different, but most organizations can begin to improve their general compliance (and create a paradigm for monitoring more granular KPIs moving forward) by tracking some core compliance KPIs such as: An ounce of proactive prevention is worth a pound of compliance cure. It’s important to set security goals that demonstrate an organization’s efforts to reach industry best practices, standards, and regulations. A few factors certainly contribute to that challenge, including: Compliance teams can’t waste time with data that won’t ultimately help them make better decisions. Non-Compliant Change Request Percentage – The percentage of change requests that do not abide by the change management process per total number of change requests. It results in various requirements such as the maximum reaction time in case of any issue, the delivery time, special discount offers, etc. Metrics help to demonstrate e ffectiveness in process (i.e. Convercent is a lot more than just GRC. Most recently, it was the annual Compliance Trends Survey from Compliance Week and Deloitte that delivered the bad news: 35% of CCOs cite data reporting and analytics as one of the top three most challenging aspects of their job, while nearly a third of CCOs aren’t measuring the effectiveness of their program through compliance risk metrics at all. Nearly one-quarter of compliance professionals say they don’t measure the effectiveness of their compliance programs, according to the Compliance Trends Survey 2014, released by Deloitte & Touche LLP and Compliance Week. Proposed compliance risk metrics: Issue trends for key risk areas. When you’re using key performance indicators to manage risk, it’s important to have measurability, consistency, and adaptability built into your compliance program. It was originally published on December 6th, 2008. The executive-level success KPIs require data from management and operational sources. Start with tracking and evaluating your most business-critical compliance KPIs, and then adapt your workflows to develop a more nuanced approach as needed. You may wish to create import metrics that track the total number of entries by method of transportation and by port; the percentage of paperless entries that were entered paperless, EDR or intensive; and the total entered value by mode and by port. Product announcements, speaker videos and more ethical inspiration. Examples. Use PurchaseControl's Advanced Digital Toolset for Optimal Compliance Management, by Keith Murphy | Oct 2, 2020 | Business Strategy, Stay up-to-date with news sent straight to your inbox, Sign up with your email to receive updates from our blog. Deciding which metrics to use may be based either on the need to address potential gaps in the compliance program, for example, or the need to assess an area that has not been assessed in a while, Snell of the HCCA says. And you can’t measure your security if you’re not tracking specific cybersecurity KPIs. The metrics that measure quality measure effectiveness. Distributing policies is nothing new for compliance teams, and as a result this has become a fairly mundane “check the box” activity. It starts with establishing, measuring, and refining the compliance-related key performance indicators with the biggest impact on operational performance. Designed to assess accountability and performance for risk owners. It is vital that organizations evaluate, integrate, and (when valuable) automate metrics that provide insights into their compliance efforts in order to more effectively prevent, detect, and respond to current and future compliance risks. HIPAA compliance refers to The Health Insurance Portability and Accountability Act of 1996, which was created to protect patient privacy. Companies regularly find themselves adapting to unpredictable changes in government and industry regulations related to risk and compliance. A compliance rate is the percentage of entities or instances that conform to a policy, process, procedure, control, rule, regulation or law.This is commonly used as a business metric or audit reporting measure. since a system or equipment failure. One of our compliance metrics examples represent the whole of basic agreements a company and a supplier lay down. Many organizations use the results of their risk assessment to prioritize their compliance program efforts—and with good reason, as regulatory guidance continually cites a risk-based approach to compliance as a hallmark of an effective program. But an effective compliance program isn’t built from minutiae. The same is true for compliance, where a poorly executed compliance program can leave organizations at risk of reputational damage, costly fines and fees, or potential litigation and regulatory intervention. Trends between type of misconduct and the factors that contributed to the misconduct —including rationalization, lack of awareness, pressure, etc. So, how do KPI’s and metrics help measure security compliance? We just need a bit more information from you so our specialists know how to assist you better. Total Compliance Employee Headcount – The total number of full-time equivalent compliance staff. – Using Metrics To Measure Compliance Performance KPIs for Compliance. It is well known that ITIL ® describes four types of process metrics: process efficiency, process effectiveness, process progress and process compliance [see, in particular, the discussion in Service Design, §3.7.5]. Compliance KPIs can be considered “watchdogs” or “early warning systems” for potential risk exposure. For example, Section B.12 offers suggestions regarding Information Security Training metrics as discussed above. Overview Effective compliance metrics provide a clear picture of an organization’s compliance program and its associated risks and controls. The importance of cybersecurity metrics. System Availability: The total number of minutes (or days, hours, etc.) Editor’s note: This article was contributed to Corporate Compliance Insights by Jim Nortz. Toward that goal, best-in-class companies are increasingly choosing to implement digital tools designed to streamline and optimize compliance management—including tracking compliance KPIs. Misconduct reporting and investigation trends are continuously cited by CCOs as one of their go-to metrics for program and risk management effectiveness. systems or equipment were actually available divided by the total number of minutes they should have been available. Ratio of Disputed Invoices to Total Invoices, Percentage of Invoices Automatically Matched. Internal and external stakeholders expect (and demand) optimal performance, profitability, and compliance—all backed by absolute transparency. When measuring worker participation, a few key safety metrics to track each month include: – Number of safety meetings and toolbox talks attended – Number of training courses completed – Number of inspections conducted and submitted – Number of closed out corrective actions Effective compliance metrics support compliance efforts by providing a window into an organization’s compliance risks and controls. Invest in the tools and techniques you need to build a robust, flexible compliance program using targeted KPIs, and your organization will gain competitive strength through more effective risk management and business strategies. Comprehensive, audit-friendly budgeting tools. Four Compliance Metrics Risk That Need to Die, Empty compliance metrics that aren’t worth tracking or reporting, factors that contributed to the misconduct, A lack of confidence in IT systems’ abilities to fulfill the CCO’s reporting responsibilities—which nearly 60% of surveyed CCOs cited, A lack of technology to help meet reporting needs—OCEG’s research pegs 53% of organizations using spreadsheets, documents and email as their primary GRC tools, A lack of confidence in metrics—42% of CCOs say they’re only “somewhat confident” or “not confident” in the metrics they use to give a true sense of effectiveness, Issue trends by location, business unit, organizational title, employee demographics (tenure, salary, etc. And while it’s critical to have compliance risk metrics  about your program in order to analyze effectiveness and make ongoing improvements, there’s still a tendency to cling to “vanity” metrics—hollow metrics that don’t actually help you do much of either. Mean Time Between Failures (MTBF) – This is a measurement of … From avoiding corruption to ensuring food safety, government agencies offer their own sets of often complex compliance requirements companies must follow to stay on the right side of the law. Identifying and codifying these KPIs provides a compliance paradigm that guides all subsequent controls and policies. Return on Capital Employed The ratio of profits to the total amount of capital invested to achieve those profits. Risk exposure increases due to incident, disclosure, training, culture assessment or policy trends, Correlation or discrepancies—and analysis of reasons for the relationships—between risk assessment results and bellwethers of a company’s cultural environment like culture assessments, incident drivers and more. Cultural Integrity Composite Score - Tone at the top - Trust in manager - Trust in co-workers - Comfort raising concerns - Communication - Organization action - Understanding of expectations Using Metrics to Measure Compliance Effectiveness. The metrics you choose should be closely aligned with your industry, business and strategy. Average Compliance Investigation Cycle Time by Type, Percentage of Internal Audits Completed On Time. Metrics that are precise and insightful help an organization identify its key risks and root causes so that resources can be applied where they most matter. Readily measurable across within a given period and across business units. Example: HR cost per employee was $590. For example, if you want a metric to tell you which new vendors have not completed due diligence, and your source for that data is Fred from Procurement, who enters the records manually in Excel and then uploads them to the dashboard every two weeks—suffice to say, you’ve gone against the spirit of Big Data analytics. Complete, high quality information on business processes, gathered more quickly. Mean Time to Repair (MTTR): Average time required to repair issues and return equipment or systems to normal operations. Although that number is an improvement from the previous two surveys, other evidence suggests compliance professionals aren’t wholly comfortable with the metrics … Following you’ll find example metrics for monitoring, auditing and investigations. We are on a mission to drive ethics to the center of business for a better world. It has been updated for clarity. Data Governance Metrics Examples. Quantity metrics may also be given in percentage. Best-in-class data security compliance to minimize cybersecurity-related risks. GRC-friendly automation and workflow management. Relationships between disclosures and incident trends, Impact of training, policies, communication and incentives on number and types of incidents, contributing factors and resolutions reached, Demographic or behavioral trends among involved parties (reporters, witnesses or subjects), Training topics and trends for key risk areas. Number of policy exceptions and disclosures submitted alongside rollouts of related policies like conflicts of interest, gifts and entertainment, etc. You can’t manage what you can’t measure. For instance, many companies track the number of people who took training, or the number of training sessions given in a quarter or year. Financial compliance, including internal and external audit management. If compliance wants to consistently and meaningfully contribute to a company’s strategic conversations, while being able to demonstrate and defend its effectiveness to leadership and regulators, then comprehensive and thorough reporting will need to become a matter of course.

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