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Seven Top Facility Management Compliance Risks
December 28, 2015
JLL recently released new research that also addresses the topic, revealing expectations and need for potential risk to businesses managed by facility management companies.
“First and foremost, facilities managers must prevent threats to human health and safety that can arise from poorly maintained life safety equipment, improper handling of hazardous materials and other workplace issues,” says Jim Whittaker, President and CEO, Facility Engineering Associates and contributing author to the JLL report. “Beyond physical risks, however, companies must also heed new financial, reputational and contractual risks. The cost of non-compliance can be severe and even material.”
As compliance issues continue to increase in priority for managers, JLL identified seven primary areas to keep an eye on to help avoid penalties that can negatively impact your organization.
Ethics. Aside from being potentially illegal, unethical behavior can have negative consequences for both a company’s bottom line and reputation. For that reason, a facility management service provider should demonstrate a strong commitment to ethical behavior that includes, for instance, the obligation to refuse gifts of any kind from subcontractors.
Safety. From maintenance of fire extinguishers to safe handling of hazardous waste, physical security is not only a top priority, but also a highly visible area of compliance risk and legal liability. And, company environmental health and safety (EHS) policies and procedures can help reduce incident risk.
Vendor and financial management. For companies, particularly those that outsource facilities management, appropriate internal financial controls and management are essential for service providers and their subcontractors for ethics compliance. Strictly enforced procurement and vendor management policies and procedures can reduce the risk.
Labor management. Companies must ensure their facilities managers, whether in-house or outsourced providers, comply with anti-discrimination laws, other human resource-related regulations and company policies not only in their own operations, but also with their subcontractors.
Information security. Many high-profile data breaches have occurred because of physical security weaknesses. The importance of these processes is elevated for companies using smart building management services or integrating corporate data into the provider’s data and analytics platforms. Companies should confirm that their service providers are equipped to protect both physical and virtual corporate data assets with best practices and access control.
Data governance. When a company is fully compliant, its data should reflect it. Even the most robust investments in compliance will not pay off if regulatory agencies can’t access the information they need, when they demand it. Facilities management teams must standardize the data related to compliance and ensure that it is accurate, consistent, timely, complete and secured.
Contractual risks: Breach of contract is a financial and legal risk where even a minor infraction can have serious repercussions. If an FM provider fails to maintain building systems properly in accordance with its master service agreement, the resulting equipment breakdown could jeopardize operations.