What is an Internal Obligation and why is it important to Compliance?

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Internal Obligations are obligations that your organization has imposed on itself voluntarily or through an agreement with a third party. In contrast to External Obligations which are imposed by a third party (i.e. Government), Internal Obligations are generated through the activities you engage in. Examples include corporate policies, environmental permits, contracts, stakeholder engagements and other agreements you have chosen to adopt.

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Compliance Maturity 

An organization achieves Compliance Maturity when it achieves and maintains a proactive approach to managing obligations driven by integrated policies, processes and procedures. This requires strong leadership, and crucially buy-in from all its staff, contractors and partners. As a result, the organization’s culture is one that readily addresses risk, knows its obligations, and assigns responsibility across all levels of planning, operations, and monitoring.

Strong management of an organization’s Internal Obligations is not only a core part of your compliance efforts, it also is a powerful way to promote a company culture of compliance. By voluntarily adhering to standards, permits, and policies, an organization is setting itself up to tackle all of its requirements. Once you have identified your internal obligations, it is time to map them to your internal systems, evaluate conformance and develop internal control mechanisms to ensure you meet your compliance obligations. With internal obligations under control, you will be prepared to identify, map, and track its External Obligations.

Integration

Recognizing that you will move from a reactive and piece-meal approach to compliance to a proactive one is the critical first step. However, in order to achieve Compliance Maturity organizations need to integrate compliance procedures and systems across your structures, departments, and teams. Too often compliance stays in the hands of a few people and is not well communicated across the organization. Failure to integrate your teams will lead to the perception that compliance is someone else’s problem and not part of everyone’s responsibilities. It is only with organizational buy-in that compliance obligations can be effectively tracked, monitored for changes, and assessed for applicability.

Well-mapped Internal Obligations form part of Internal Control Mechanisms that ingrain a culture of compliance. These include but are not limited to:

  • Published Internal Obligations, e.g. Standards and Policies
  • Documented Procedures, accessible to all relevant stakeholders
  • Training, on an ongoing basis, including refresher training
  • Monitoring, by company administrators and team leaders
  • Internal audits, scheduled and assigned to responsible parties

These mechanisms and tools are usually administered centrally, but the data should be readily available to all concerned parties. It is possible to reduce the administrative burden with information management systems such as Nimonik, but no software will do all the work for you. To make compliance reality in your organization you need to allocate the time and resources. If done right, the management of Internal Obligations is an investment that will pay dividends. That investment can create motivated and engaged team members that drive a culture of compliance and ensure successful data integration that leads to Compliance Maturity.

Find out more about Compliance Maturity, here

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You can find a guide to optimal management of Internal Obligations in our updated Best Practices Document.

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