Navigating Regulatory Compliance and New Business Models
According to a new report by Deloitte and Forbes Insight called The Fourth Industrial Revolution, executives are giving great thought to the impact that changing regulatory environment and delivery models or new businesses will have on businesses in the next five years. A 1600 global executives were surveyed in the report.
The emergence of new delivery models and the changing regulatory environment may not appear to be related when examined from the surface, but they are both interrelated and intertwined when deeply cross-examined. During one of the interviews for the Deloitte and Forbes Insights, John Flint who is the Chief Executive of retail banking and wealth management, and the CEO-elect of HSBC stated that there are already governing structures, legal systems, rules and institutions that were appropriate for the last industrial revolution. This question, however, remains if regulations are up to date on emerging businesses and technologies.
New government regulations will directly impact both the industrial workforces, the general public sphere and the business environment. Therefore, it is important that business stakeholders become actively involved in the regulation formulation process, engaging in highly productive and collective interactions with decision makers about how the regulatory environment unfolds.
This was summarized by Flint when he said that governments write the law on behalf of their people, but he personally thinks that big business has a responsibility to initiate the conversion. He went ahead to state categorically that even as business leaders can’t write the laws, but they can determine how they choose to behave, express a view of risks and what right behaviors and attitudes are, and then live by them. He concluded by insisting that business leaders need to set the ball rolling by commencing debates centered on regulatory laws. This was further corroborated by additional findings of the Forbes Insights research that shows that there are three ways that organizations can benefit from being compliant, these include:
1. Be Ahead of the Game: It is very important for startups and tech businesses that leverage on technology to ensure that they are flexible enough to changes in regulations when they are implementing their solutions. Existing businesses like banks and financial organizations should make sure that they act in accordance with both existing regulations and build flexible strategies that will align with future regulations. Businesses should also consider the societal impacts of their organizational goals, mitigating the resultant risks and downsides appropriately, especially in relation to security or data privacy protection.
One of the ways banks financial providers and banks can stay updated on evolving regulation is by automating data retention policies for all data types. This will help ensure that they have enough flexibility in their government regulatory strategies. This move is also validated by a report titled Embracing the Information Explosion: Digital Communication Governance in Banking and Financial Services of Forbes Insights.
2. Leverage on Compliance: compliance with regulations is also an opportunity that needs investment and guarantees returns on investment in the long run since the same business pointers that appear as challenges can also spotlight solutions. Several technological innovations centered around ensuring regulatory compliance can also be tailored towards better business results. In the report titled Understanding Your Customer, Forbes insights buttress this by stating that for certain industries, especially banking and insurance, the question of data quality is broader than just a foundation for a superior customer experience. Rather, being compliant with national and international regulations make it imperative for these institutions to have an accurate handle on their customers’ data. Hence, businesses must bring efficiency and effectiveness into equilibrium when striving to implement compliant programs, channeling present cost of compliance as a long-term investment into the business’s future.
3. Avoid Distraction: Sudden sweeping regulations can cause huge tremors in the business environment, Noteworthy is the recent General Data Protection Regulation (GDPR), which took effect in May 2018. Most businesses were not prepared for it. This new regulation created a demand for transparency when dealing with consumer privacy. In order to meet a regulatory demand like the GDPR which is quite complex, time and resource consuming. A company with a good legal and compliance framework setup before such an incident should fare better.
Whilemany companies might fall victim to distraction as a result of the huge data requirement demanded by the regulation. Examples of panic can be seen as words like Y2K are now common in the consulting and legal industry as stated in an article published on the Forbes.com website. In the same article, it was stated that most IT and Legal firms were unprepared for the EU data protection laws.
To guard against regulatory positions affecting innovation, companies must take time to invest in business models that accommodate data-driven and compliance systems. The emerging Industry 4.0 will be spearheaded by a business that can adapt quickly to changes in regulations that affect their industry.