What Are Red Flags That Our Company Has Compliance Gaps?

A strong compliance program is designed to protect your company from legal risk, financial penalties, and reputational harm. But even the best-intentioned organizations can develop compliance gaps—places where policies are ignored, controls are weak, or misconduct goes undetected.

The trouble is, many companies don’t realize they have these gaps until it’s too late: when a government audit, lawsuit, or whistleblower brings them to light.

Fortunately, there are warning signs you can watch for. Here are some of the most common red flags that your company may have compliance gaps—and what you can do about them.

1. Lack of Clear, Updated Policies

If your compliance policies are:

• Outdated

• Vague or inconsistent

• Inaccessible to employees

…you may have a problem. Written policies and procedures are the foundation of any compliance program. If employees aren’t sure what the rules are—or can’t easily find them—you can’t expect compliance.

What to do:

- Review and update your policies regularly (at least annually).

- Make them clear, practical, and easy to access.

- Communicate them through multiple channels—not just a one-time training.

- Involve cross-functional stakeholders when updating policies to ensure operational relevance.

2. Inconsistent Training

If:

• Only some employees receive compliance training

• Training is too generic to apply to real-world risks

• Employees treat it as a 'check-the-box' exercise

…your training program may be ineffective. Effective training and education are critical to making compliance a living part of your culture.

What to do:

• Provide targeted, role-specific training—especially for high-risk areas (sales, procurement, finance).

• Make training interactive, scenario-based, and engaging.

• Reinforce key messages through ongoing communication campaigns.

• Track training completion rates and comprehension through assessments.

3. Low Awareness of Reporting Channels

If employees don’t know:

• How to report misconduct

• Whether reports will be taken seriously

• Whether they’ll be protected from retaliation

…you likely have a compliance culture problem. Effective lines of communication are essential for detecting issues early.

What to do:

• Promote your reporting channels frequently (e.g., posters, emails, leadership messaging).

• Ensure reporting channels are easy to access and user-friendly.

• Conduct pulse surveys to gauge employee awareness and trust in reporting mechanisms.

• Publicize examples of how the company has acted on reports (without breaching confidentiality) to build trust.

  
  

4. Gaps in Monitoring and Auditing

If:

• You rely solely on reactive audits (after a problem occurs)

• You have little visibility into high-risk areas

• You don’t review third-party compliance

…your company may be flying blind. Internal auditing and monitoring are key to preventing compliance gaps from turning into full-blown violations.

What to do:

• Build regular, proactive monitoring into your compliance program.

• Use data analytics where possible to detect trends or anomalies.

• Conduct risk-based audits of third parties and business units.

• Establish a compliance dashboard to track key performance indicators (KPIs) and metrics.

5. Uneven Enforcement of Compliance Policies

If:

• Disciplinary action depends on who the violator is

• Leadership is seen as 'above the rules'

• Misconduct is tolerated in 'high-performing' employees

…your compliance program lacks credibility. Consistent enforcement and disciplinary guidelines are critical to setting the right tone.

What to do:

• Apply discipline fairly, at all levels of the organization.

• Conduct regular reviews of disciplinary actions to ensure consistency.

• Provide leadership training on accountability and ethical decision-making.

• Include adherence to compliance expectations in performance evaluations and promotion decisions.

6. Slow or Incomplete Response to Issues

If:

• Investigations take too long or never reach a conclusion

• Corrective actions are unclear or poorly documented

• The same issues keep recurring

  
  

…your company may not have an effective prompt response process. How you handle reports and investigations says a lot about your commitment to compliance.

What to do:

• Ensure prompt, thorough investigations by trained personnel.

• Document investigative steps and outcomes in a consistent manner.

• Conduct root cause analysis for significant issues.

• Communicate lessons learned and implement program improvements based on findings.

7. Leadership Disconnect

If:

• Senior leadership rarely discusses compliance

• The Board receives little compliance reporting

• Compliance is seen as 'legal’s job' rather than a companywide responsibility

…your compliance program may lack effective governance and oversight.

What to do:

• Engage leadership and the Board regularly on compliance topics.

• Assign clear accountability for compliance at the executive level.

• Include compliance updates in Board agendas and management meetings.

• Foster a tone from the top that emphasizes integrity and ethical leadership.

8. Third-Party Risks Overlooked

If:

• You lack visibility into third-party compliance practices

• Due diligence is not consistently performed on new vendors or partners

• Third-party audits are infrequent or nonexistent

…your organization could be exposed to significant hidden risks.

What to do:

• Establish robust third-party due diligence processes.

• Include compliance obligations in contracts and monitor for adherence.

• Conduct periodic audits of high-risk third parties.

• Integrate third-party risk management into overall compliance monitoring efforts.

9. Limited Program Evolution

If:

• The compliance program hasn’t been updated in years

• Risk assessments are outdated or infrequent

• Lessons from investigations are not incorporated into program improvements

…your program may no longer be keeping pace with regulatory expectations or business changes.

What to do:

• Conduct regular compliance program reviews and risk assessments.

• Benchmark your program against industry standards and DOJ guidance.

• Update policies, training, and controls based on evolving risks and lessons learned.

• Solicit feedback from employees and stakeholders to continuously improve the program.

Final Thoughts

Compliance gaps often start small—a missed training, an outdated policy, an ignored report. But left unaddressed, they can grow into serious risks that damage your company’s finances, reputation, and future.

The good news? Most gaps can be identified and addressed before they become major problems—if you know what to look for.

If you’re seeing any of these red flags in your organization, take them seriously. Conduct a proactive self-assessment, engage leadership, and strengthen your compliance program. A culture of integrity and accountability is one of the most powerful assets any company can build.