The Importance of Records Management for Legal and Regulatory Compliance

Every business, no matter the size, creates records. Everything from invoices, customer or employee data, financial documents, and even emails can be considered business records, which means that for any business, records management should be a priority. 

Think of records management as your business’s safety net. It’s not just about filing documents away, it’s a strategic practice that can protect your organization from legal and compliance issues. From the moment a record is created to its final disposal, records management ensures you are maintaining legal, regulatory, and operational compliance.

Let’s dive into records management, its importance and risks, and the strategies you can follow to protect your business from legal action and costly fines.

Understanding Legal and Regulatory Compliance

Let’s break down what legal and regulatory compliance means. Simply put, it’s about following all relevant laws, standards, and regulations that apply to your business. This includes well-known regulations like the General Data Protection Regulation (GDPR), Health Insurance Portability and Accountability Act (HIPAA), and the Sarbanes-Oxley Act (SOX).

Without an effective records management strategy, you could find yourself in trouble with legal or regulatory authorities. Here are just a few examples of legal issues that come from mishandled business records:

• Tax document mismanagement can result in incomplete tax records, leading to audits and hefty penalties from the IRS.
• Unintentionally mishandling health records through improper disposal of PHI, or falling victim to a data breach due to a lack of risk assessment, can result in HIPAA violations. These violations can lead to fines of up to $1,500,000 per year.
• Accidental misreporting of financial figures due to incomplete records can violate the Sarbanes-Oxley Act (SOX). Even unintentional violations can result in fines of up to $1,000,000.
• If your business deals with clients, customers, or employees who are citizens of the European Union, GDPR regulations apply. Failure to purge duplicate or obsolete records, or maintain records of information consent, can lead to GDPR violations and hefty fines of up to €20 million.
• Misplacing contracts can lead to missed deadlines or failed SOPs, potentially resulting in legal action from clients or business partners.
• Employees not trained in records management procedures may inadvertently release protected information, such as personal identifying information or NDAs, which can also lead to legal action.

You can ensure compliance, protect your business, and avoid these legal pitfalls by understanding these risks and implementing an effective records management strategy.

The Role of Records Management in Compliance

Records management ensures that sensitive documents don’t end up in the wrong hands while also ensuring that the essential documents you need are easy to access. This helps you avoid penalties, fines, or damage to your reputation.

Here are some quick tips to keep in mind as you prepare to implement your records management program:

• Get to know the laws and regulations that your business needs to follow. Working with a professional records management service provider can help you understand your business’s risks and stay compliant.
• Put data backup procedures into place, so that your important data isn’t lost in case of technical issues or disasters.
• Review and update your practices regularly to make sure your procedures are still effective.
• If your business handles health information, take special consideration to maintain HIPAA protocols through secure medical records management.

Key Elements of a Compliant Records Management Program

Even understanding the importance of an effective record management strategy, it can be difficult to know where to start. What goes into a strong records management program? Here are the key ingredients:

• Data Inventory and Classification: Know your data like the back of your hand — where it’s stored, what it contains, and its sensitivity level.
• Retention Schedules: Decide how long to keep different types of records based on legal, regulatory, and business requirements. This will vary based on your industry, location, and the nature of your business records.
• Secure Storage and Access Controls: Keep your records safe and sound, and out of reach from unauthorized access.
• Auditable Record Trails: Keep track of who has accessed or altered each record, and when.
• Secure Chain of Custody: Make sure every record transfer throughout its lifecycle is secure and well-documented through a defined chain of custody. This includes ensuring compliant and documented record destruction at the end of the lifecycle.

Implementing a Compliant Records Management Program

Once you grasp the key elements of an effective records management strategy, your business is ready to develop and implement a records management program.

Policy Development

Start by crafting policies that mirror your compliance needs and incorporate the key elements of effective records management. Make roles, responsibilities, procedures, and protocols clear and practical. Document everything and make sure every employee has access to these documents.

Learn more about creating effective records policies by checking our guide.

Training and Education

As a business managing proprietary information, one of the biggest steps you can take to safeguard data and records is to educate the people who are interacting with it daily: your employees.

Regular training sessions on these policies and procedures are a must. This not only promotes compliance but also helps employees understand why records management is so important.

Regular Audits and Reviews

Don’t forget to conduct regular audits to ensure ongoing compliance, spot areas for improvement, and identify new risk factors.

Remember, creating a robust records management program isn’t a one-off task. It requires ongoing attention and updates to ensure that your business is keeping up with legal requirements.

Trust the Data Experts at Augusta Data Storage

Effective records management is the key to legal and regulatory compliance. It’s a surefire way to reduce risk, boost efficiency, and safeguard your business’s reputation. If you’re feeling unsure about your current records management practices, we’re here to help.

At Augusta Data Storage, we understand the importance of compliance, and we’re experts in delivering top-notch records management solutions. We provide full-service records management from document imaging, secure off-site storage, file purging and relocation, and secure destruction. Contact us today to learn how we can help you follow secure and effective records management strategies that protect your information throughout its lifecycle.