Regulatory compliance is of the utmost importance for organizations across various industries. It doesn’t matter if you’re a commercial organization or active in the public sector: failure to comply with the right rules and regulations will spell trouble. One of the biggest compliance challenges is the sheer volume of regulatory requirements in our modern day and age. AI, climate change and ESG, privacy and data protection, corporate disclosures, cybersecurity, fraud, and export and import requirements all come with their own sets of international, national, and regional regulatory requirements.
Many organizations struggle to identify which rules and regulations are applicable to their activities, increasing the risks of compliance issues. In this blog, we will provide a clear, step-by-step guide to determining which regulations apply to your industry and organization. This is an important step towards guaranteeing compliance anywhere and anytime.
The complexity of regulatory compliance
Navigating the potentially treacherous landscape of regulatory requirements resembles finding your way in a bustling and densely populated city crammed with many different buildings. You need a good roadmap or guide that prevents you from getting lost in such a dynamic and overwhelming environment.
The regulatory landscape gets even more complex if you operate in multiple countries and regions, and are active in a number of different industries. Let’s highlight some of the common challenges that many organizations encounter when they are bravely charting the regulatory jungle.
Overlapping regulations
Regulatory overlap is a reality that causes many companies serious headaches. It often obscures policy objectives and hinders the development of effective and clear regulation. In addition, regulatory overlap can inflict real costs on businesses through repetitive inspections and data collection efforts. Regulatory overlap becomes particularly burdensome when agencies issue conflicting rules with inconsistent standards.
Frequent regulatory changes
Many regulatory requirements evolve with societal developments and business demands and are, therefore, rarely cast in stone for eternity to come. Furthermore, technological advancements and global economic shifts drive the regulatory environment in constant flux. NIS2, the Digital Operations Resilience Act (DORA), the EU AI Act, and new SEC rules for public companies in the United States are prime examples of novel regulatory frameworks that are bound to make their mark in the upcoming years. In order to stay compliant with these novel or changing regulatory requirements, organizations have to be flexible and must be able to track regulatory changes and enforcement trends very precisely.
Accessing relevant information
To remain compliant, stay on track, and crack regulatory codes, you need to be able to track all the relevant information at the right time. Many organizations lack the capability or analytical tools to access the treasure trove of data that they possess. Data is not centrally managed, but scattered across different systems and silos. This seriously complicates proper compliance management.
Understanding your organization’s regulatory environment
Thoroughly understanding the regulatory environment in which your organization operates is the first step towards betterment. There are several different factors that determine which requirements apply to an organization. These are:
- The industry in which you operate. Apart from a number of general rules and regulations that every organization in a certain jurisdiction has to adhere to, there are also many industry-specific standards and regulatory requirements. Examples are rules and regulations regarding food safety and the use of pesticides (agriculture), fall protection and safe working environments (construction, factory work), terms and conditions, reflection periods after purchase, warranty and packaging (retail), and business reporting (corporate services and finance).
- Location. Many countries means many laws and customs. Therefore, the locations from which you operate also determine which rules and regulations you must abide by. This part of the regulatory equation can get especially tricky if you are active in several countries and engage in global trade. In that case, a thorough understanding of both national and international (and sometimes even regional) regulations is an absolute must.
- The nature of your business activities. Many rules and regulations are industry-specific or only relate to certain activities.
To understand the regulatory environment that accompanies and partially steers your operations and strategies, you should invest a significant amount of time and resources in identifying potential regulatory obligations. It’s important to do this in a continuous fashion instead of treating the subject as a one-off job.
The steps to identifying applicable regulations
The best way to identify the regulations that apply to your business and organization? Make a step-to-step plan that allows you to master this critical task in a structured and waterproof fashion. Such a plan should include the following steps and practices.
Identify key areas of regulation
Properly identifying the key regulatory requirements that apply to your organization and activities is the first cornerstone of ongoing compliance success. Break down the main areas of regulation that could impact you in different categories (environmental, financial, social, data protection, cybersecurity, privacy protection, trade). Doing this allows you to create a business operations model that shows you how the business activities of the organization impact the types of regulations you need to comply with.
Track regulatory changes and trends
Establish policies and strategies that allow you to monitor regulatory trends, developments and changes continuously. Be sure to include regular assessments to understand how new rules may affect existing processes and what changes are needed to ensure compliance. This keeps you razor-sharp and flexible, creating more space to timely adapt to changing regulatory landscapes.
Conduct regular audits
Regulatory audits are excellent tools to critically assess your compliance workflows and can be a big help when it comes to avoiding penalties and reputational damage. A regulatory audit systematically examines an organisation’s activities to determine whether they meet all applicable legal requirements and internal guidelines.
You can conduct a regulatory audit in the following way:
- Decide who will carry out the audit. This is usually an impartial team with detailed knowledge in the field of compliance issues, led by a compliance officer.
- Establish the scope of the audit. What’s the purpose and which risks do you want to address?
- Conduct a risk assessment that identifies the risks to compliance and assesses the likelihood and impact of those risks.
- Review policies, processes and controls and determine if they are in compliance with applicable regulatory requirements.
- Analyze, report and suggest corrective actions (if necessary).
Call in the experts
Don’t be afraid to seek the consultation of legal experts or compliance professionals to gain a better understanding of relevant regulations and the ways in which they evolved through time and continue to evolve.
Use the right regulatory tools and resources
The right toolkit and resources help you track and understand regulations, making compliance management much less of a hassle. Government databases and industry associations can deliver valuable insights into the historical and current (and possibly even future) state of important regulatory requirements. Advanced RegTech solutions allow you to automate and professionalize large chunks of your compliance workflows. If these tools harness the spectacular analytical power of state-of-the-art AI, it becomes possible to analyze and cross-map vast amounts of data, allowing you to make better informed decisions in a fast and flawless manner.
The role of technology in compliance
Technology, and dedicated RegTech tools, in particular, simplify and improve the process of identifying, understanding, and managing applicable regulations. They provide you with ample automation and scalability options, making compliance management processes less time-consuming, more efficient, and less error-prone.
The Be Informed platform is an excellent example of a modern and smart RegTech solution that checks all the desired boxes. Key features of the platform are:
- Centralized regulatory management. The Be Informed platform provides you with centralized oversight and maximum control for regulatory compliance processes. This allows you to ensure perfect alignment with all organizational policies and standards in your industry.
- Machine-readable regulations. Take control of your compliance sources by interpreting and translating regulations into machine-readable formats. This ensures complete traceability to the origins of regulations that govern the processes of your organization.
- Advanced interpretation capabilities. The platform offers advanced capabilities for capturing, interpreting, and translating regulatory requirements into actionable insights for even the most complex and challenging compliance operations.
- The opportunity to create end-to-end compliant applications for all your major processes.
Unlock the key to regulatory knowledge
Regulatory compliance can only be achieved by understanding and unraveling the complex web of regulatory requirements that impact your organization, industry, and business activities. Identifying and tracking regulatory requirements, conducting audits, and consulting experts will guide you in the right direction. The right RegTech tools allow you to effectively transform this information into better, more efficient, and less error-prone compliance workflows.
