All businesses, regardless of size, scope, and service, operate within external conditions that the business must be aware of. Of all the external factors that cannot be overlooked by a business, regulatory change is one of the most important.
This is because all businesses operate within a legislative environment that is constantly changing and being updated. So even though your business may currently comply with regulatory standards, the laws are sure to change, which will mean that you will have to begin a regulatory change management process for your company.
The article presents itself as a guide to managing regulatory change. We will discuss what regulatory change is, why it is important, and outline some of the key ways in which you can manage regulatory change for your business.
What is Regulatory Change?
When you look at the financial market, which includes banks, the stock exchange, insurance companies, etc., what you see is a highly regulated industry. This means that there are legislative standards in place that all actors and businesses associated with the financial market must comply with in order to continue operating and avoid sanctions.
Regulatory change is the process by which legislative standards are changed via policy due to shifting economic, financial, or technological environments. As government bodies shift the goalposts, companies must manage their own regulatory change in order to meet the new standards.
Regulatory changes may often be a pain for those who have to manage their businesses accordingly, but there are very important reasons why regulations might become subject to legislative change. For one thing, the regulatory change increases the amount of competition in the market. This breeds more cutting-edge applications and innovations as all businesses must comply with the same general regulations.
Furthermore, regulatory change acts to protect customers. There is no one way in which regulatory change can achieve this, as customers could be at risk due to any number of factors, including pricing, security, and others. This is tied into a third reason why regulatory change is important, which is that it protects against financial crime.
How to Manage Regulatory Change?
As a business owner, it is very important that you develop a strategy for your company to be able to manage regulatory change efficiently and effectively. While it will definitely take some effort, by incorporating changes in reporting obligations, health and safety regulations, and record-keeping processes, you can make sure your company is up-to-date on legislative and industry standards.
In order to manage regulatory change effectively and efficiently, you’ll need to understand what the regulatory change management process constitutes and take it one step at a time. Here are some actionable tips that you can use to manage regulatory change in your company.
1. Understand the Regulatory Changes
The first step is to make sure that you are up-to-date on what the latest regulatory changes are. This can be done by subscribing to information agencies that regularly run regulatory change news services and signing up for newsletters from regulatory change agencies. This will ensure that you are up-to-date on the latest regulatory developments and are consistently in the loop.
It is not enough, however, to keep an eye on current regulatory changes. As a business owner, you should also be aware of what regulatory changes are likely to come up in the near future.
In order to truly understand the relevant regulatory changes, it is important to have a grasp of how they affect your business. This will give you an idea of the measures you will need to take in order to minimize or eliminate any compliance risk.
2. Determine Where to Implement Regulatory Change
Once you have a grasp over what the regulatory changes are and how they will affect your company, it’s time to begin managing the regulatory change in an appropriate manner. This might mean tweaking small elements of your company’s standard operating procedures and work methods in order to meet the new standards.
New legislation could potentially affect your company at any level. This could be at the financial level, the health and safety level, the cybersecurity level, or the environmental impact level. No matter what the regulatory change is, you will have to manage your company’s operating procedures accordingly.
Also, understand that regulatory change does not necessarily have to be a bad thing for your company. If, for example, the new legislation makes changes to greenhouse gas emission laws and your company is already performing better than the legal requirement, this will surely provide a great marketing opportunity for your business.
3. Determine How Regulatory Change Will Impact Your Business
In order to properly manage regulatory change and comply with any new legislative standards, there will certainly be a cost that your company will have to incur. These costs could be in the form of procuring an alternative raw material, implementing an alternative production process, or updating the qualifications of your employees.
These costs must certainly be taken into account during the financial planning that goes along with managing regulatory change. In order to effectively manage regulatory change, you will have to be well aware of these factors well beforehand, so that you can work to strategize accordingly and minimize costs where possible.
4. Implement Regulatory Change
In order to manage regulatory change, one must be strategic and have enough foresight to take all relevant factors into account. This is why well before implementing regulatory change, it is important to understand what to change, how to change it, what it will cost, and who is responsible for carrying out the changes.
Once you have covered all these steps, it is time to finally implement regulatory changes in your company. Make sure you do not blindside any of the other teams and departments in your company, especially if they are directly affected by the new changes. Moreover, in order to make a smooth transition, you will need their support as well as any suggestions they may have to offer.
Managing Regulatory Change in the Digital Age
As we have seen, managing regulatory change efficiently and effectively takes a lot of strategic planning, coordination, and transparency. For this reason, computers and other technological innovations in the last decade or so have allowed businesses and firms to significantly improve the ways in which they manage regulatory change.
There are multiple ways in which technology helps manage regulatory change. Computers allow firms to collect relevant data all in one place, an innovation many use to collect regulatory data more efficiently. Moreover, computers can be programmed to show a business only those regulatory changes that are applicable to the business in question, hence making all insights more applicable, relevant, and practical.
It is no mystery that technological innovation over the last decade has made large-scale coordination and communication much more efficient. This certainly aids businesses who are making large-scale regulatory changes that require a lot of cross-communication between departments.
Finally, computers provide us a means by which we can view all relevant data about a business’s performance and finances all in one place. By developing a platform that keeps a check on whether different areas of the company are complying with new legislative standards, the process of flagging and assessing incidents becomes much more streamlined.
Regulatory change is something that all businesses, firms, and companies must be wary of if they want to avoid sanctions and maintain their reputation in the market. Since this is not something that business owners can avoid, having a streamlined strategy through which your business approaches, manages, and implements regulatory change can go a long way.