A Deep Dive Into ISO 37301: Compliance Management Systems
The International Organization for Standardization (ISO) released ISO 37301 in 2021 to replace ISO 19600 and further refine its compliance management systems (CMS) guidelines and standards.
ISO 37301 is the leading international standard organizations follow to construct and maintain effective compliance management systems. Organizations of all sizes looking to establish, develop, implement, evaluate, maintain, or improve their CMS can do so with the help of ISO 37301.
Keep reading to learn more about the defining characteristics of ISO 37301, how to pursue ISO 37301 certification, and how to develop a culture of compliance within your organization.
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What is ISO 37301:2021?
ISO 37301 is a technical framework that provides standards and a certifiable benchmark for compliance management systems around the globe. ISO introduced the framework in April 2021, outlining how organizations can configure their CMS to meet various legal regulations.
ISO published ISO 37301 via a 40-page report that includes sections focused on the following vital elements surrounding compliance management systems:
- Context of the organization (understanding needs, compliance risk assessments, subsidiary risk)
- Leadership (roles and responsibilities, compliance officers, anti-bribery management systems, and compliance framework obligations)
- Planning (implementation, objectives, planning for changes)
- Support (resources, awareness, communication)
- Operation (internal controls, sustainability, due diligence)
- Performance evaluation (internal audits, top management review)
- Improvement (promoting a culture of continuous improvement)
Replacing ISO 19600
ISO 19600 was replaced by ISO 37301 to introduce certification. While ISO 19600 also focused on CMS configuration and best practices, the framework only outlined recommendations (not requirements) and was classified as a Type B management system standard (MSS).
ISO 37301 is a type A MSS, meaning accredited auditors can certify the framework, and applicable organizations can pursue certification. While constructing ISO 37301, ISO maintained several of the standards it introduced with ISO 19600. Therefore, any organization implementing the standards published in ISO 19600 will have an easier time achieving ISO 37301 certification.
Another critical update included in ISO 37301 is the introduction of whistleblowing protections. These protections help organizations implement policies and install controls to prevent sensitive information from being leaked by disgruntled or maleficent employees.
What is a Compliance Management System (CMS)?
A CMS is a cohesive system of documents, processes, protocols, tools, and guidelines that help an organization achieve compliance with various regulatory and legal requirements.
Most comprehensive CMSs will assist an organization with risk management, compliance programs, employee training, stakeholder communication, and continuous monitoring. Some organizations also utilize a CMS to achieve their ESG goals.
Benefits of a Compliance Management System
Implementing a compliance management system can offer organizations a host of benefits. The most common benefits associated with the implementation of a CMS are:
- Risk management: By developing an ongoing approach to adhere to industry and legal requirements, an organization can minimize operational risks
- Quality: A comprehensive CMS will prevent errors and detect nonconformities, saving an organization time and energy
- Brand trust: Organizations that demonstrate superior compliance management will develop confidence with customers, vendors, and other business contacts
- Competitive advantage: Organizations that can adapt to ongoing compliance requirements will develop a competitive advantage compared to others who demonstrate non-compliance
- Efficiency: Overall, constructing a comprehensive CMS will improve the efficiency of all departments of an organization
Why is ISO 37301 Important?
ISO 37301 is essential for most organizations because staying up to date with compliance requirements is an ongoing process that requires a structured approach and active monitoring.
Organizations that implement ISO standards and achieve certification with ISO 37301 will have an easier time developing a CMS that supports their compliance efforts. ISO 37301 certification demonstrates that an organization operates in accordance with all significant laws, regulations, and industry guidelines. Certification with ISO 37301 also provides internal validation and assurance that an organization has taken all necessary precautions to prevent compliance risks and or interruptions.
Since ISO 37301 is the global benchmark for CMSs, organizations that still need certification will be at a competitive disadvantage when pursuing contracts against organizations that have had their CMS appraised by a certification body.
Benefits of ISO 37301
The benefits of ISO 37301 are vast. Organizations that implement ISO standards and pursue certification will likely experience benefits in various critical areas of their business.
Specific benefits of ISO 37301 include:
- Third-party compliance management: Ensuring all third-party vendors and service providers meet international standards and industry compliance regulations
- Positive organizational culture: ISO 37301 helps organizations establish a positive culture of compliance and good governance
- Improved efficiency: ISO 37301 helps organizations address compliance concerns quickly
- Improved accuracy: ISO 37301 helps organizations address compliance concerns accurately
- Positive brand reputation: ISO 37301 improves an organization’s industry reputation and ethical integrity by installing compliance measures and eliminating non-compliance activities
- Risk-based approach: ISO 37301 allows organizations to weigh the impact of third-party partnerships and other business decisions based on perceived compliance risk
- Improved confidence: Implementing ISO 37301 and the ability to integrate new standards quickly will allow organizations to enhance confidence across departments
- Trust and loyalty: ISO 37301 improves the efficiency of organizations, which subsequently improves product and service quality and establishes customer trust and loyalty
How Do ISO 37301 and ISO 37001 Relate?
In short, ISO 37301 presents comprehensive standards for all elements of compliance management systems. On the other hand, ISO 37001 focuses on one key aspect of effective compliance management: anti-corruption management.
Since both ISO 37301 and ISO 37001 focus on similar CMS principles, they can be easily combined and integrated within an organization’s operations. Other common ISO standards include ISO/IEC 27001 and ISO 9001 (quality management).
What is the Certification Process For ISO 37301?
The ISO 37301 certification process will differ depending upon:
- Initial certification meeting: The first step in the ISO 37301 certification process is an introductory certification meeting where the accreditation office and organization exchange information and discuss the finer details of the certification process
- Pre-audit planning meeting: The next step in the process is a pre-audit meeting that allows the organization to identify potential areas of improvement and begin implementing changes before proceeding with certification. While this stage of the process is sometimes optional, it does present an excellent opportunity for the organization to understand its strengths and weaknesses
- ISO 37301 certification audit: The stage in the ISO 37301 certification process is where the certification body evaluates the organization’s documentation, objectives, and overall compliance management system. Certification companies occasionally break this step into a two-stage process that includes an on-site evaluation of an organization’s CMS
- Audit report: During the next stage of the certification process, the certification body evaluates the audit results. The certification body will then either grant the organization an internationally recognized certificate or indicate what changes the organization needs to make before achieving certification
- Surveillance audits: After the organization has achieved certification, the accreditation office will conduct surveillance audits regularly to ensure the organization meets the requirements of ISO 37301. Most certification offices conduct surveillance audits once a year after an organization obtains its ISO 37301 certificate
- Recertification: Most ISO 37301 certificates are valid for three years. Organizations should pursue recertification in good time to ensure gaps in certification do not occur. Once the certification body recertifies an organization, the organization will obtain a new ISO 37301 certificate.
Is ISO 37301 Certification Mandatory?
Compliance with ISO 37301 is not mandatory for any organization. However, organizations that operate within highly regulated industries such as finance, healthcare, insurance, technology, and others can achieve a competitive advantage by pursuing ISO 37301 certification.
How Can UpGuard Help With ISO 37301 Compliance?
UpGuard helps organizations manage compliance across both their internal and vendor ecosystems, making it easy to track compliance throughout the vendor lifecycle. UpGuard Vendor Risk grants organizations access to automated compliance questionnaires they can send to new and existing vendors across their supply chain.
In addition, UpGuard empowers organizations to develop robust third-party risk management protocols through the use of vendor risk assessments, risk remediation workflows, and other powerful cybersecurity tools.
