It will come as no surprise that the costs of compliance are increasing. With evolving regulatory requirements and increased scrutiny of oil and gas operations, it is more important than ever that compliance is pro-actively managed and the information required to demonstrate compliance to stakeholders is at their fingertips when they need it. But on a traditional return-on-investment (ROI) analysis, investing in compliance management isn’t an obvious way to boost the bottom line.
Why pay to better manage compliance when non-compliance may not be a problem in the first place? If recent global trends are any indication, the ROI of RegTech solutions (regulatory technology) means that they are always worth the cost – regardless of your organisation size, current compliance levels or business objectives. With compliance costs sometimes accounting for 5-10% of revenue, using technology to reduce these overheads is an easy pathway to pleasing stakeholders.
What is the ROI of compliance?
Compliance is often viewed as an exercise in avoiding negative consequences and compliance management software is effectively seen as an insurance policy that only pay out when something goes wrong. While avoided costs are one of the upsides of compliance management software, introducing a proactive compliance management culture to an organisation has a number of other very real and ongoing benefits. In other words, it is both the painkiller and the vitamin. The benefits of proactive compliance management include:
- Efficiency gains, transparency and reduced daily operational costs
- Minimising operational downtime
- Maintaining reputation as a best-in-class operator with regulator, joint venture and community stakeholders
- Avoidance of fines and penalties
- Reduced external legal costs
- Reduced internal staff and management involvement
- Reduced stress on personnel tasked with managing compliance
- The bottom-line – improved stock value
Is the ROI worth it?
Given the potential for significant penalties for oil and gas operators, these can be company-breaking for smaller companies and private companies, especially when investor confidence is vital to the company’s success. While the immediate fine may have a proportionally smaller negative impact on the value of a larger company, a negative reputation is much harder to pay off. Compliance management software pays for itself many times over by avoiding duplication of effort, identifying process management gaps that may be increasing your risk of non-compliance and freeing up personnel to spend time on value-add activities.
Invest in a fit-for-purpose solution
Designed specifically for the oil and gas industry, Totum Compliance is a cloud-based compliance management software that enables upstream operators to maintain their legal and social licence to operate, anywhere in the world. By mapping all titles, obligations, contracts and risks registers to their activities, operational teams can confidently collaborate and increase efficiency.
“Totum Compliance offers a very advanced software-as-a-service solution. The integrated task management is very strong – it shows who is responsible and accountable for what.” – Senior HSE Risk and Quality Assurance Co-ordinator.
More information HERE