Compliance risk: A guide to assess and manage it effectively

Per PwC’s Global Compliance Survey 2025, 85% of organizations report that compliance requirements have become more complex over the past three years, increasing the risk of non-compliance and violations or fines.

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In the current age, compliance coexists with evolving vulnerabilities like unpredictable AI adoption and higher cybersecurity risks. Organizations face tighter scrutiny from regulators, customers, and partners, and even a minor lapse or an unmanaged gap can lead to penalties, operational disruptions, and credibility loss.

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To help you navigate the growing complexity of managing compliance risk, this guide will cover:

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• Different types of compliance risks with examples
• Steps to assess and manage compliance risks effectively

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What is compliance risk?

Compliance risk is the potential legal, operational, or financial exposure an organization faces if it fails to comply with applicable laws, regulations, or internal rules or policies. It isn’t limited to one industry or function and can lead to consequences such as:

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• Financial penalties
• Legal action
• Reputational damage
• Loss of trust among stakeholders

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Compliance risk doesn’t always stem from deliberate misconduct. It can also arise from minor oversights, outdated processes, or even misinterpreted regulations. Data suggests unintentional mistakes are more common, with one study reporting that human error accounts for 91.3% of compliance-related incidents.

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What adds to the complexity is the evolving nature of compliance risk. Systems and processes that are compliant today can quickly become non-compliant as regulations, business models, and technologies change, which is why compliance risk management is an ongoing process.

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What are the types of compliance risk? [With examples]

Compliance risks can vary, depending on the organization’s size, industry, and location. We aligned with themes in the 2025 PwC global compliance survey to map out some of the most high-priority compliance risks today: 

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1. Cybersecurity and data protection risks: As organizations rely more heavily on cloud systems, the risk of data breaches and cyberattacks is rising. Protecting personal and sensitive records has become a top priority.
2. Regulatory risks: Laws and regulations are constantly changing, making it easy to overlook updates. The risk is compounded for organizations meeting several compliance frameworks across jurisdictions.
3. Operational risks: These arise when internal processes, systems, or controls fail to meet regulatory or policy requirements. They can be caused by human error, inefficient workflows, or incomplete documentation.
4. Corporate governance risks: These risks relate to how the organization is directed and controlled. Poor corporate governance practices, including unethical conduct and a lack of transparency, can lead to regulatory scrutiny and reputational harm.
5. Financial risks: Errors in reporting, accounting, or internal controls can result in fines, penalties, or the misrepresentation of financial statements. This is why accurate and transparent financial practices are so important.
6. Third-party or vendor risks: If a vendor doesn’t comply with regulations or mishandles data, the resulting compliance exposure often extends to the organization itself. Many regulations hold the parent organization accountable, even if it outsources data handling services.
7. Environmental, social, and governance (ESG) reporting risks: ESG disclosures are now mandatory in many regions. Misreporting, also known as “greenwashing,” could lead to penalties and investor backlash.
8. AI risks: When organizations adopt new AI technology, they open themselves up to new risks, such as algorithm bias, transparency, and data governance, which can violate data privacy regulations.
9. People risks: The most unpredictable risks are driven by human behaviour. Incomplete training, oversights, and unclear roles and responsibilities can easily lead to compliance violations.

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Compliance failures are often rooted in people risks, especially unclear accountability. Without defined roles and ownership for prioritizing compliance-related tasks, organizations will struggle to meet requirements consistently. Compliance must be driven across functions—, not delegated solely to GRC teams.”

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Jill Henriques

GRC Subject Matter Expert, GTM, Vanta

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LinkedIn

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Example scenarios

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How to assess and manage compliance risk

To effectively evaluate and manage common compliance risks, follow these steps:

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1. Scope your compliance obligations, systems, and task flows
2. Evaluate risks and control gaps
3. Plan and implement risk treatments
4. Continuously monitor risks and mitigation strategies

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Step 1: Scope your compliance obligations, systems, and task flows

Map every compliance requirement that governs your organization, including regulatory, framework, contractual, and internal requirements.

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You’ll also need to map where compliance requirements intersect with daily processes, so it’s best to collaborate with cross-functional teams—such as HR, IT, legal, finance, and security—to source vital information and avoid data silos.

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Discuss considerations like which department generates sensitive data, who has access to which records, where those records are stored, and if third parties are involved. Next, create a list of departments and activities that could pose a compliance risk.

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A good strategy is to map your data flows to identify sensitive spots. Sensitive data flows may be governed by stronger compliance requirements, so they require structured protections. Particularly, understand:

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• Where sensitive data comes from
• Where it lives
• Who accesses it
• How it’s modified
• How long it is stored

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Be mindful of hidden shadow systems or undocumented workflows, often driven by employees, as they can easily bypass internal controls and trigger untracked compliance risks. A solution here is to train teams on why compliance exists so they can make better value-based decisions in new or unspecified scenarios.

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Step 2: Evaluate risks and control gaps

Next, compare your current controls and procedures against scoped regulatory and policy requirements to identify compliance gaps. Besides validating documented controls, you should interview relevant teams or conduct internal audits to uncover unaddressed risks.

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All your findings should be recorded in a centralized risk register. Make sure that you thoroughly describe each identified risk by including:

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• Description of the issue
• Risk score based on their impact and likelihood
• Ownership

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In complex compliance environments, risk evaluation must also factor in overlapping obligations and shared responsibilities in third-party relationships. Compliance risk can be quite unpredictable in interdependent systems and teams, so it’s important to have proactive SLA controls and regular external assessments to detect high-stakes gaps early.

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Another complex scenario is when two or more regulations have conflicting requirements. For example, the GDPR’s data minimization principle could conflict with another country’s data retention requirements. In such cases, it’s best to consult with compliance experts.

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Step 3: Plan and implement risk treatments

Once you identify gaps, prioritize remediation based on severity, compliance deadlines, and business risk. The main mitigation strategies are:

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• Eliminating the risk
• Mitigating the risk
• Transferring the risk
• Formally accepting the risk based on what the regulation allows

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For example, some healthcare organizations may accept certain HIPAA-related risks when encryption isn’t technically feasible, and document their justification and mitigation measures with legal and risk exception process or approval.

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To ensure accountability and tracking progress, define a remediation timeline, task owners, and success criteria. Maintain thorough documentation of remediations done—with rationale if necessary—to support potential regulatory or compliance audits.

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Tip: You can use compliance and risk management tools such as Vanta for step-by-step guidance on governance and remediation specific to your compliance

landscape.

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Step 4: Continuously monitor risks and mitigation strategies

Considering that technological evolution is relentless and new regulations consistently emerge, you need to regularly refresh risk assessments and treatment plans.

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Establish a workflow to continuously track compliance components, maintain evidence, and validate that controls function as intended. Setting a cadence for routine control checks or vulnerability scans can help you stay audit-ready.

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For example, you can conduct quarterly control checks and annual deep-dive assessments aligned to certification cycles, such as SOC 2, ISO 27001, and HIPAA. Some compliance programs, such as the FedRAMP, may also require monthly checks and reporting.

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You must also religiously update the risk register when:

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• New regulations take effect
• New markets or data types are added
• Tools, scope, and infrastructure change
• An audit or incident uncovers a gap

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If the budget allows, organizations have a dedicated compliance officer or GRC lead to oversee these activities and maintain visibility across the departments. Small and medium businesses usually don't have dedicated risk management roles. They typically rely on their legal team to address contract, vendor, or privacy risks, while the CISO might be responsible for information security risks.

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Best practices for compliance risk management

Follow these best practices to build a resilient compliance program and keep your compliance risk under control:

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1. Stress test under various scenarios: Simulate incidents such as data breaches or system failures to evaluate how your controls respond, and train your team to address such situations.
2. Build documented processes: Accurate and comprehensive documentation is essential for proper scoping and audit readiness.
3. Provide staff training for compliance risks: Human factor is one of the main variables in compliance risk. Educate your team on how to recognize and respond to compliance risks and prepare a knowledge base for written reference.
4. Use automated risk management solutions: To reduce manual effort, minimize errors, and ensure that risks are continuously monitored, rely on automation solutions. It can drastically cut audit preparation time by centralizing evidence collection and streamlining documentation. Tools like Vanta can also help with expert tasks typically handled by compliance officers, such as writing and managing policies, as well as provide real-time compliance status and generate reports.

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Streamline compliance risk management with Vanta

Vanta is an agentic trust management platform that makes compliance risk management systemized, efficient, and visible across teams. You can monitor and manage your compliance and risk management program from a single dashboard. This includes a comprehensive risk register where you can track your risks, assign owners, score risk, and more.

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Even if you’re new to or overwhelmed by risk management, use Vanta’s library of 100+ risk scenarios and suggested control mapping to get up to speed on the best practices to strengthen your compliance posture. If you have multiple internal and external compliance obligations at a time, plan a custom framework with Vanta to get a tailored overview of risks that matter to you and reduce dependency on external experts.

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Vanta’s risk management product is extensive, scalable, and serves teams of all sizes and sectors. Key features include:

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• Action tracker with 400+ integrations with popular applications
• Risk program personalization (i.e., custom risk register columns, terminology, and more)
• Continuous risk monitoring and mitigation planning
• Risk snapshots that you can share with auditors
• Vendor risk management 
• Risk reporting—and more!

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If you need compliance consultants, you can use the Vanta partner network to find experts for your industry or framework.

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Schedule a custom demo and let Vanta experts guide you through the platform's relevant risk management features.

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FAQs

How often should compliance risks be assessed?

The general best practice is to assess compliance risks quarterly or annually. Consider more frequent assessments if regulations are more volatile, significant system changes occur, or when you introduce new products or processes.

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Who is responsible for managing compliance risk?

The leadership and compliance officers are primarily responsible for managing compliance risk. However, each department needs to contribute and can be held accountable internally for individual processes, controls, and policy updates.

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Can automation replace manual compliance audits?

Compliance automation tools can’t fully replace manual audits, but they can streamline the busywork in the audit process by collecting evidence, testing controls, and monitoring risks.

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What are the most common compliance frameworks?

According to Vanta’s Trust Maturity Report, the most common and widely-adopted compliance frameworks are SOC 2, ISO 27001, and PCI DSS.