In an economy facing high inflation and the possibility of an economic downturn, it's a natural reaction for CFOs to pull the purse strings tight, reduce overhead costs, and cut department budgets. Though cost-cutting is understandable, it's short-sighted to ask essential departments to do more with less.
Risk management, quality assurance, and compliance are critical business capabilities that deserve attention and resources in the current climate. An organization with weak risk management and compliance capabilities invites safety concerns and regulatory trouble, while a strong compliance program can help a business thrive.
Here's why your organization should increase its risk management and compliance budget for next year.
1. Keep Pace with an Increasingly Complex Regulatory Environment
The regulatory environment in pharma and life sciences is changing quickly due to globalization, contradictory regulations, supply chain challenges, and process complexity. Manufacturers and distributors must contend with the reality that a failure to maintain compliance can result in delays, costs of rework, severe fines, and/or legal penalties. Ultimately, companies that learn quickly and adapt earnestly will prosper. For this to happen, companies need subject matter experts throughout their organizations.
Unfortunately, most companies find it difficult to recruit and develop enough talent to meet their needs. As a result, outsourcing has become the most effective strategy for companies to keep pace with an ever-evolving compliance landscape.
2. Smart Companies Use Compliance as a Strategic Investment
Compliance programs offer more than an opportunity to minimize risk and avoid regulatory penalties, they can also provide a significant business advantage. Taking a proactive approach to quality assurance and compliance management is key to maintaining your company’s reputation and is far less expensive than reacting to consent decrees, warning letters, and product recalls. When companies invest time and resources in quality and compliance programs, audits, and consulting support, they're adding business value, improving resilience, and minimizing risk – all good ways to ensure your organization is well-positioned for the future.
3. Delaying Short-Term Investment Can Lead to Higher Expense Long-Term
Whether it’s through formal projects or creating company culture, investing in compliance and quality always yields good returns. Compliance failures can be obviously costly, in terms of fines, remediation costs, and reputational damage. The costs can also be more subtle. As many compliance professionals will attest, the most expensive test in any laboratory is the re-test. Re-testing can lead to manufacturing downtime, out-of-specification (OOS) investigations, increased manufacturing costs, product quarantines, increased waste, and product shortages. Don't let short-term budget concerns create long-term budget disasters.
4. Risk Management Creates Investor Value
Investors are looking for companies that can demonstrate a comprehensive risk management strategy. When you use a risk management framework to guide your compliance activities, continuously monitor your operations, and consult with subject matter experts, you are building a safer, more resilient organization. You can avoid disruptive incidents and use your compliance program as a selling point. Businesses that incorporate compliance management into their business strategy see better growth and increased profit margins. In addition, organizations with solid compliance cultures create relationships of mutual trust with investors and stakeholders and build positive relationships with regulators over time.
Conclusion
Every business is different. There’s no such thing as a "one size fits all" when it comes to compliance strategy. The best practices will vary by jurisdiction, company size, and business strategy.
But one rule applies to all organizations, regardless of size or business objectives: compliance is a strategy that adds value to the business. In the changing global marketplace, a comprehensive compliance strategy is a clear path to protecting your business and outperforming the competition over the long term
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Need help creating your compliance strategy? Call Quality Confidential at (919) 810-9230 for a free consultation to discuss your needs.
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