What Is Regulatory Compliance? A Complete Guide for Beginners

Did you know a single compliance violation could cost your business millions in penalties or even damage your reputation? 

The EU’s GDPR imposes a fine of up to 20 million euros or up to 4% of the organization’s total global turnover of the preceding fiscal year for severe compliance violations. For HIPAA violations, you can face a fine ranging from $141 to over $2 million per violation.

Yet, with regulations constantly changing and cyber threats rising, maintaining business regulatory compliance has never been more challenging, particularly for small organizations without dedicated legal teams.

This guide will help you navigate the complexities of regulatory compliance management. You’ll learn what regulatory compliance means, why it matters, key industry regulations and standards to watch, and how to build a strong, future-proof compliance regulatory program. Let’s start with the definition of regulatory compliance.

What is Regulatory Compliance? 

Regulatory compliance is the process of adhering to local, federal, state, or industry regulations set by the government and regulatory agencies. A strong regulatory compliance program ensures that business activities align with legal and regulatory compliance requirements to reduce risk and maintain trust.

Business regulatory compliance is essential to avoid legal penalties, protect reputation, and ensure operational integrity. In industries like finance, healthcare, and manufacturing, compliance with laws and regulations safeguards data, health, and safety. 

The common regulatory compliance examples include HIPAA, PCI DSS, OSHA, GDPR, SOX, and more.

Key Industry-Specific Compliance Regulations and Standards 

Different industries face unique compliance regulatory requirements, shaped by their specific risks and responsibilities.

Here are the key regulatory compliance examples across the five major industries including healthcare, finance and banking, retail, technology, and manufacturing:

1. Healthcare industry

Healthcare organizations handle highly sensitive patient data and life-critical services which makes legal and regulatory compliance essential for protecting privacy and ensuring safety.

Common compliance regulations in the healthcare industry include:

A) HIPAA (Health Insurance Portability and Accountability Act)

HIPAA was enacted in 1996 to standardize the protection of patient health information (PHI) and ensure confidentiality.

HIPAA applies to hospitals, clinics, insurance providers, and third-party healthcare vendors. It is governed by the U.S. Department of Health and Human Services (HHS).

Under HIPAA, you’re required to adhere to the following regulatory compliance requirements.

• Protect electronic protected health information (ePHI) with administrative, physical, and technical safeguards
• Conduct regular security risk assessments
• Report breaches affecting over 500 individuals within 60 days
• Enter Business Associate Agreements (BAAs) with vendors that access PHI

B) FDA Regulations (Food and Drug Administration)

The FDA regulation was established to ensure the safety, efficacy, and security of drugs, medical devices, and food products. It applies to drug manufacturers, medical device manufacturers, food producers, and distributors.

FDA’s key compliance regulatory requirements include:

• Submitting premarket approvals for new drugs/devices
• Monitoring and reporting adverse events
• Adhering to good manufacturing practices (GMP)
• Ensuring the authenticity and integrity of electronic records (Part 11)
• Establishing standard operating procedures (SOPs) for production and quality control
• Documenting and validating every stage of the manufacturing process

2. Finance and banking industry

Financial institutions must comply with strict regulations to prevent fraud, money laundering, and financial crises. Financial regulatory compliance in this sector focuses on transparency, security, and risk mitigation.

Common compliance regulations include:

C) Sarbanes-Oxley Act (SOX)

SOX was enacted in 2002 after several corporate and accounting scandals, including Enron and WorldCom to enhance corporate accountability and transparency in financial reporting. Under this law, top executives are held liable for the accuracy of their company’s financial records.

It is governed by the U.S. Securities and Exchange Commission(SEC) and applies to publicly traded companies, accounting firms, and corporate executives (CEOs, CFOs).

Regulatory compliance requirements include:

• CEOs and CFOs must certify financial statements
• Implementation of effective internal controls over financial reporting
• Retention of audit work papers for at least seven years
• Establishing whistleblower protection mechanisms
• Maintain audit trails for financial transactions

D) Payment Card Industry Data Security Standard (PCI-DSS)

The PCI-DSS was established to protect credit card transactions from breaches and fraud.

This regulation is governed by the PCI Security Standards Council and applies to merchants, banks, and service providers processing card payments.

Under PCI-DSS, companies are required to:

• Encrypt cardholder data in transit and at rest
• Conduct regular security testing
• Restrict access to payment systems

3. Technology industry

Tech companies must prioritize data security and privacy and adhere to global regulatory compliance management frameworks such as:

E) General Data Protection Regulation (GDPR)

GDPR has set the global standard for legal and regulatory compliance in data privacy, inspiring similar laws in other regions like the CCPA in California.

The regulation was established to protect EU citizens' personal data and privacy. It is governed by the European Data Protection Board (EDPB) and applies to any business (worldwide) handling personal data of EU/UK citizens, regardless of where the organization is located.

The GDPR covers the collection, storage, processing, and management of personal data.

Under the regulations, you must:

• Obtain clear, explicit consent for data collection and processing
• Appoint a Data Protection Officer (DPO) in some cases
• Provide users the right to access, rectify, and erase their data
• Report data breaches within 72 hours

F) NIST Cybersecurity Framework

The NIST Cybersecurity Framework was developed by the National Institute of Standards and Technology(NIST) to help organizations manage and minimize cyber security risks. 

The framework offers a structured methodology for identifying, protecting, detecting, responding, and recovering from cyber events. 

It applies to U.S. federal agencies and private organizations (especially in tech, critical infrastructure, and federal contracts).

Under this framework, organizations are required to:

• Conduct regular risk assessments
• Identify and categorize IT assets and associated risks.
• Implement protective measures, including encryption and multi-factor authentication.
• Detect and respond to threats effectively.
• Create data recovery plans to ensure business continuity.

While voluntary, NIST is widely adopted and forms the backbone of many organizations' regulatory compliance programs.

4. Manufacturing industry

Manufacturers must comply with safety, environmental, and quality standards to ensure operational efficiency and legal adherence. Common compliance regulations and standards in this industry include:

G) Occupational Safety and Health Administration (OSHA) Standards

OSHA standards were established to ensure workplace safety and reduce hazards. The regulation sets and enforces guidelines that employers must use to protect employees from workplace hazards. 

It is governed by the U.S. Department of Labor and applies to all manufacturing and industrial businesses operating within the U.S.

Under OSHA, organizations are required to:

• Provide adequate safety training to employee training and personal protective equipment (PPE)
• Report and record workplace injuries and illnesses
• Conduct regular safety inspections and audits
• Display relevant OSHA notices in visible areas

H) ISO 9001 (Quality Management System)

ISO 9001 is an internationally recognized standard for quality management systems (QMS). It was established to help organizations consistently deliver products and services that meet customer and regulatory compliance requirements, while also enhancing customer satisfaction. 

ISO 9001 is governed by the International Organization for Standardization (ISO) and applies to organizations, regardless of size or industry, that want to standardize quality management practices. 

The regulatory compliance system covers a wide range of areas, including process documentation and standardization, customer satisfaction, product consistency, and more.

Under this regulation, organizations are required to:

• Define and track quality objectives
• Implement internal audits and process reviews
• Maintain documented procedures for handling defects
• Use customer feedback for continuous improvement

Benefits of Regulatory Compliance  

Developing a strong regulatory compliance program helps organizations gain several advantages including: 

Prevents fines and penalties

Failure to comply with laws and regulations can lead to costly fines and legal actions, sanctions, or even shutdowns. Implementing a robust regulatory compliance system keeps you aligned with current legal requirements, which minimizes financial and operational risks.

Improves workflow and efficiency

A robust regulatory compliance system streamlines processes by standardizing procedures and reducing redundancies. Compliance frameworks often require documentation, audits, and risk assessments, which help identify inefficiencies. By formalizing processes, businesses can enhance productivity while maintaining accountability.

Prevents reputational damage and builds trust

Legal and regulatory compliance also plays a critical role in protecting a company's reputation. Non-compliance incidents such as data breaches or ethical violations can severely damage public perception and erode customer trust. 

Maintaining a proactive regulatory compliance program demonstrates integrity and builds confidence among stakeholders, investors, and clients.

Reduces security breaches

Many regulations, such as PCI DSS and SOC 2, focus on data security. A proactive regulatory compliance program enforces cybersecurity measures and protects sensitive information from breaches. 

Regulatory compliance frameworks like the NIST CSF help businesses implement robust security controls and reduce vulnerabilities.

Drives business growth

Compliance opens doors to new markets, partnerships, and investment opportunities as many clients and investors prioritize working with compliant businesses, as it minimizes risk.

Additionally, adhering to regulatory compliance requirements ensures smoother audits and financial reporting, supporting sustainable long-term growth.

Steps to Achieve Regulatory Compliance 

To build a stronger regulatory compliance program, follow this step-by-step process.

Step 1: Identify relevant laws and regulations

The first step in the regulatory compliance management process is identifying which laws, standards, and industry regulations apply to your organization/industry. This includes not only national laws but also state, local, and international regulations, depending on your operational footprint.

Knowing what legal frameworks apply to your operations allows you to prioritize efforts and develop a focused regulatory compliance management plan.

Here are some tips to help you:

• Consult with legal counsel or compliance experts to map out all applicable regulations and standards
• Subscribe to government or regulatory newsletters for real-time updates
• Use compliance software or online regulatory databases that consolidate laws by region and industry

Step 2: Understand the requirements of each law and regulation

Once you identify applicable regulations, interpret what each law demands from your organization. This includes knowing deadlines, documentation obligations, reporting criteria, and enforcement penalties. 

Laws and standards can be broad and complex, so you need to break them down into actionable components.

Follow these tips:

• Translate regulatory language into internal compliance guides
• Create compliance checklists to map each requirement to a business process
• Engage compliance officers or legal experts to validate interpretations
• Host training sessions to ensure stakeholders understand their responsibilities

Step 3: Conduct an initial internal audit to identify gaps

Before implementing solutions, conduct an internal audit to assess how your current processes align or fail to align with applicable compliance regulatory requirements. This step uncovers compliance gaps, outdated policies, or risky practices.

During auditing, assess:

• Policy documentation
• Operational workflows
• Employee awareness and training
• Reporting and monitoring mechanisms

Here are some tips to get started with internal audits:

• Use audit templates that map controls to legal requirements
• Interview department heads and review documentation to assess real-world practices
• Rank compliance gaps by risk level and set remediation priorities

Step 4: Establish controls and procedures

Based on your audit findings, design internal controls, procedures, and policies to ensure legal and regulatory compliance across all functions. 

These controls should be clear, documented, and integrated into daily workflows. They should also be operational, preventative, and responsive.

Follow these tips:

• Develop standard operating procedures (SOPs) for high-risk activities
• Assign compliance roles and responsibilities to key personnel
• Implement approval workflows for tasks requiring regulatory review (e.g., financial reporting, data sharing)
• Designate compliance officers or cross-functional compliance committees
• Develop escalation protocols for compliance breaches

Step 5: Leverage technology tools and software

Manual compliance processes are error-prone, inefficient, and unsustainable for growing businesses. Use tools and software that can help you in:

• Automating policy distribution and employee attestation
• Creating digital audit trails
• Monitoring regulatory changes
• Centralizing compliance documentation

These tools can streamline financial regulatory compliance, data protection, and other high-risk compliance areas with real-time monitoring and analytics.

Atlas Systems offers tools for automating third-party risk assessments, managing policy attestations, and maintaining compliance with laws and regulations. Its centralized dashboards support digital audit trails and regulatory change monitoring.

Here are tips to help you out:

• Use compliance management software such as Atlas Systems, LogicGate, and Penneo to centralize policies, tasks, and documentation.
• Automate audit trails, reporting, and alerts for critical compliance events.
• Integrate compliance tools with existing systems (e.g., HR, finance, or IT platforms).
• Use dashboards to track key compliance KPIs in real time.

Step 6: Review standards regularly and continuously improve

Regulations evolve, and so must your regulatory compliance strategy. Conduct periodic reviews to ensure your organization adapts to legal updates, shifts in business models, and emerging risks.

Here are tips to help you:

• Schedule quarterly or annual reviews of your compliance policies and procedures
• Conduct periodic training sessions to reinforce compliance culture
• Encourage employee feedback on policy usability and clarity to refine controls and workflows
• Stay engaged with industry forums and regulatory bodies.

Common Challenges and Issues in Regulatory Compliance

As you expand your business into new markets and adopt emerging technologies, staying compliant with laws and regulations becomes increasingly complex. Here are common compliance issues to be aware of:

Complex and rapidly evolving regulations

One of the most pressing challenges in business regulatory compliance is keeping pace with complex and ever-changing rules. Regulatory bodies frequently update requirements in response to global events, technological advancements, and economic shifts. 

Without a proactive regulatory compliance management strategy, organizations risk falling behind or misinterpreting critical updates. These gaps can result in non-compliance, fines, or reputational damage. You must, therefore, build agility into your regulatory compliance systems to adapt to these evolving demands.

Inadequate risk management frameworks

A strong regulatory compliance program relies on effective risk management. However, many businesses lack structured frameworks to identify, assess, and mitigate compliance risks. 

In fact, some organizations treat compliance as a box-ticking exercise rather than integrating it into their operational strategy. 

This reactive approach increases vulnerability to violations, particularly in industries with stringent legal and regulatory compliance demands. Without a proactive risk assessment plan, companies may overlook critical gaps until regulators or auditors flag them—often when it’s too late.

The Atlas Advantage:

Atlas Systems offers you the tools to identify risks stemming from third-party relationships and understand how these risks impact your organization’s ability to deliver service, maintain compliance, and safeguard vital assets.

Here is how Atlas handles third-party risk management:

• Risk identification and assessment: Atlas enables continuous risk identification and assessment to help you identify potential risks before they escalate, prioritize them, allocate resources effectively, and ensure compliance with industry standards.

• Vendor performance monitoring: The platform provides advanced AI-powered risk monitoring tools for tracking vendor reliability, operational consistency, and adherence to contractual obligations.

Lack of awareness of regulatory changes

Regulatory changes often occur with little public attention, especially when they pertain to niche industries or specific regions. Companies that do not monitor legal updates consistently risk overlooking crucial developments. 

Without real-time visibility into regulatory changes, businesses can’t ensure compliance with laws and regulations. This lack of awareness can undermine the entire compliance process, especially if updates affect operational procedures or data-handling practices.

Inadequate employee training

Even the best regulatory compliance system fails if employees don’t understand their role in maintaining compliance. Many organizations provide minimal or outdated training, leaving staff unaware of policies, procedures, or recent regulatory changes. 

To uphold legal and regulatory compliance, you need to conduct regular employee training sessions at all levels to ensure your staff is well-versed in relevant protocols and policies. 

Insufficient internal audits

Without regular internal audits, you lack the insight needed to detect and correct compliance gaps. Audits are a key part of any effective regulatory compliance management plan. They help identify inefficiencies, prevent violations, and ensure alignment with current laws. 

Companies that neglect internal audits often miss red flags until it’s too late, exposing them to legal and financial risks.

Best Practices for Effective Compliance Management 

Follow these best practices to ensure your regulatory compliance program remains robust at all times.

Stay updated with regulatory changes

Regulations are constantly evolving in response to market changes, political shifts, and global events. You must stay ahead of updates to financial regulatory compliance standards, industry-specific requirements, and regional mandates. To avoid compliance gaps, subscribe to trusted regulatory updates, join industry associations, and use automated tracking tools to monitor changes efficiently. 

Invest in compliance training for employees

Human error accounts for 74% of compliance breaches. What does this mean? Your compliance program is only as strong as the people behind it. 

You need to ensure employees across all departments understand the relevance of compliance with laws and regulations in their daily tasks.

Implement tailored training sessions, refresher courses, and use real-world case studies to help reinforce policy awareness and improve overall accountability.

Establish strong internal controls

A regulatory compliance system thrives on clear controls: documented procedures, approval workflows, and segregation of duties. 

For instance, limit access to sensitive financial systems to prevent fraud, or require dual approvals for high-risk transactions. 

Also, tailor controls to your organization’s size and risks—small businesses might automate approvals, while larger enterprises may need dedicated compliance officers.

 Conduct regular audits and assessments

Audits aren’t just for regulators—they’re your chance to catch issues in your regulatory compliance program before they escalate. Schedule internal audits quarterly (or biannually for low-risk industries) and third-party assessments annually. Focus on high-impact areas like data privacy or workplace safety.

Automate processes with regulatory compliance software

Manual tracking is error-prone and inefficient. Use modern compliance tools to streamline documentation, automate compliance monitoring, and generate reports that simplify audits. 

A reliable regulatory compliance system enables organizations to track workflows, flag anomalies, and ensure that all required actions are completed on time. 

Furthermore, automation reduces human error and allows compliance teams to focus on strategy rather than manual tasks.

Use Atlas Systems for a Stronger Regulatory Compliance Management Program 

Without the right tools, building a robust regulatory compliance program can be a nightmare.

Atlas Systems provides a suite of automation, data governance, third-party risk assessment and management tools to ensure your organization manages cyber security risks effectively, adheres to industry regulations and standards efficiently and proactively.

See what clients are saying about the Atlas team of experts:

The good news? If you’re unable to use the platform, their team of cyber security and compliance experts are always ready to help you out.

Speak with our experts to explore how Atlas Systems can meet your compliance needs!

FAQs on Regulatory Compliance

1. What are the best tools and software for regulatory compliance management?

Top tools for regulatory compliance management include Atlas Systems, which offers robust third-party risk solutions; LogicGate, known for customizable workflows; and MetricStream, ideal for large enterprises. These tools support legal and regulatory compliance, streamline audits, and enhance your regulatory compliance system to meet evolving standards.

2. How can AI and automation help with regulatory compliance?

AI and automation streamline regulatory compliance programs by monitoring risks, automating document reviews, and flagging violations. 

They improve accuracy, speed, and scalability in maintaining compliance with laws and regulations, reducing manual errors, and ensuring that your business regulatory compliance efforts remain efficient and up-to-date.

3. What industries are most impacted by compliance regulations?

Industries like finance, healthcare, and pharmaceuticals face strict financial regulatory compliance and privacy mandates. These sectors must uphold stringent legal and regulatory compliance to avoid sanctions.

4. Why is regulatory compliance important?

Regulatory compliance protects organizations from legal risks, fines, and reputational damage. A well-managed regulatory compliance program builds stakeholder trust, supports ethical operations, and ensures compliance with laws and regulations as well.

5. What are the common regulatory compliance examples?

Common examples include GDPR for data privacy, SOX for financial reporting, and HIPAA for healthcare data. These represent essential aspects of legal and regulatory compliance that businesses must follow.