Regulatory Change Management
Governments influence and control the markets using different tools. There’s the monetary policy, in which the governments affect market movements by changing the influx and availability of currency. There are fiscal policies, which define what type of business activity will be encouraged and supported.
Then there is the regulatory policy – where the government creates administrative law and regulatory policy to regulate business activity. Regulatory policy is much more direct than either fiscal or monetary policy, because it explicitly restricts and permits business activities and defines limits of acceptable processes and strategies.
What is regulatory policy?
There are many industries which are kept heavily regulated by the government due to significant externalities of those industries. The government creates regulatory policies to ensure that these industries operate in a sustainable manner and their negative externalities are minimized. The energy sector, the financial sector, and the healthcare sector are some of the most heavily regulated sectors of the economy. The energy sector is heavily regulated to ensure that pollution caused by harnessing energy does not create a toxic environment, the healthcare sector is regulated to ensure that only the highest quality care is provided to patients, and the financial sector is heavily regulated because it forms the backbone of every other industry in the economy.
Difference between administrative law and regulatory policy
Laws are created by the government and so are regulations, but they are very different in nature. Laws apply to each person and institute within the country, while regulations are rules that tell businesses how to act within the law. Money laundering is a crime – there are laws against it, and any bank that facilitates it can face criminal action. There are then many regulations related to money laundering – these regulations define the safeguards and protocols the banks must observe in order to ensure that no money laundering occurs through their bank. Laws are rules, while regulations are the practices which ensure that the rules are followed.
Laws rarely change, while regulations are known to change often. Minor adjustments to regulations are carried out all the time, to the point where managing regulatory policy change is an ongoing function at most financial institutions. Protective regulatory policies are regularly updated to safeguard against any new threat that appears or vulnerability that gets discovered.
Have a look at how our automation based regulatory change management tools help your organization achieve better compliance levels at a faster pace across the organization.
Managing regulatory policy change
Regulatory change management is a major challenge for businesses. These regulations define what the business must do, and not complying with these policies can result in hefty fines and reputational losses. Businesses must continuously comply with a framework that morphs and evolves. The biggest problem is that financial institutions follow trends and plan meticulously. An unexpected regulatory policy change can thus throw all plans in disarray, as the destination the bank was smoothly sailing towards may no longer be viable.
That is why regulatory change management systems have become a common sight at financial institutions. These systems allow businesses to quickly comply with regulatory compliance policy. Any changes that have been made are instantly highlighted by these systems. Using a unified GRC system results in even better regulatory change management. If the regulatory change management module is linked with the risk management and compliance management solutions, then they all work in harmony. The business will not only learn what regulations have changed, but also how the changes affect compliance throughout the organization, and how the risks change in light of the new regulations.
Having such a comprehensive regulatory change management system in place helps business exponentially improve adherence to regulatory policy changes. They are able to adapt to the changes not just faster but also better. Such a system can do wonders for businesses that operate within a heavily regulated industry. If your business also needs to work with changing regulatory policies, then the Predict360 regulatory change management solution can help improve efficiency and productivity. Get in touch with our team to see how the system will help your business achieve its regulatory goals at faster speeds.