Every company or organization goes through a state of intense changes. However, the laws and restrictions of the industrial environment may make the transition more difficult for some. Yet, if these rules were to alter, that would lead to a significant realignment in how we run businesses.
In any of these possible outcomes, regulatory information might act as a buffer, easing the transition and reducing the severity of the impact. If you want to learn about regulatory intelligence, find out what you need here!
What is regulatory intelligence?
Regulatory Intelligence is a subset of business intelligence that uses modern tools such as Artificial Intelligence (AI), Real-Time Data Analytics, Natural Language Processing (NLP), and Automation to provide actionable insight into statutory compliance.
It combines data and automation to ensure organizations are aligned with relevant laws and regulations. Companies can monitor regulatory changes better and make necessary adjustments with the help of ARI (and avert the consequences of noncompliance). Usually, it consists of two parts: operational intelligence and market intelligence.
Most of the data utilized in operational intelligence originates from highly restricted internal networks. In this case, regulatory intelligence software searches through corporate documentation or databases to gather all questions, opinions, and responses on regulations.
Market intelligence aims to facilitate the development of an ecosystem fueled by openly available data. These resources are available online, such as official government sites, regulatory agencies, news aggregators, discussion boards, etc.
Using artificial intelligence, regulatory intelligence software may crawl through these sources, record textual and visual data, and extract relevant information. The generated data may be in a formatted, fragmented, or semi-structured form, and the NLP engine will use one or more of these to determine what that data means.
Hence, regulatory intelligence services enhance efficiency in legislative administration and processes (now and in the future), improve stakeholder engagement, provide transparency, perfect regulatory projection, serve as a strategic imperative, and more.
Who needs regulatory intelligence?
There is a wide range in the intensity of regulation across different industries. So, in specific settings, regulatory intelligence may be an absolute need, while in others, it may just be a luxury. For example, the following sectors need regulatory knowledge to survive:
- Legal entities
- Financial institutions
- Pharmaceutical
- Multinational companies
- Regulatory agencies
The importance of regulatory intelligence
Reduce revenue losses from non-compliance
If you ask any compliance officer, they will tell you that the most immediate advantage of following regulations is increased financial security. A business that violates the law can face hefty penalties.
Regulatory penalties may not only severely diminish the profitability of large corporations but may also devastate smaller businesses, even leading to their bankruptcy. For violations of external regulations, state authorities levy fines ranging from small amounts to severe repercussions. For instance, until now, U.S. banking institutions have paid the most substantial penalties. In 2020, the three largest U.S. banks — Goldman Sachs, Wells Fargo, and JP Morgan Chase — paid $7.50 billion in penalties out of $11.39 billion levied against all banks in the country.
Noncompliance is unlawful, and the governing authorities may act appropriately against the company. In extreme cases of noncompliance, governing authorities may require businesses to cease operations or be terminated permanently.
Remain updated on laws, rules, and regulations
Complete compliance may seem like an illusion for firms adapting to ever-shifting federal, industry, and state regulations. The revolving door of the GRC cycle requires accurate and timely regulatory information to manage risks and ensure compliance effectively. Knowing the relevant regulations is essential for dealing with abrupt shifts.
Protecting yourself against compliance issues also helps you become the go-to person in your field by taking the initiative and earning sway in your chosen sector. If you want to stay ahead of the curve in your industry, you must prioritize regulatory intelligence in your business.
In rare instances of noncompliance, compliance officers have been subject to regulatory and government enforcement action. With the financial collapse of 2007–2008, regulators and government agencies have increased their scrutiny of the function and duties of compliance officers. In addition to penalizing the business for its violation, these agencies also hold individuals responsible for their misconduct. This is a warning signal for compliance officials previously exempted from their misconduct. It is possible to better prepare for these unexpected detours using a GRC platform equipped with compliance tools.
Protection from cybercrime
If your business complies with cybersecurity standards, you can protect against breaches both within and outside of an organization and from malware assaults. The confidentiality of sensitive information belonging to your business, staff, and clients may be preserved by adhering to these regulations.
Industries with a higher risk profile —healthcare and finance — understand the importance of the data they gather and agree they are a prime target for cybercriminals.
Some sectors think they are safer since they are less likely to be targeted. This false belief often results in less emphasis on regulatory compliance and weakened security, increasing the chance of cyberattacks and data breaches.
Loss of customers due to a data breach may devastate a business’s finances, perhaps even causing it to go bankrupt and shut down entirely. One of the means to maintain data protection is regulatory compliance, which requires firms to conform to standards that may protect their assets from threat actors.
Increased profitability
Compliant companies win. Many buyers prefer to do business with suppliers and providers that share their values and culture of compliance.
Learning about regulatory intelligence isn’t enough. You must realize its significance to your company’s success. Regulatory information helps mitigate risks, control costs, and speed up your business’s approval and compliance processes.
With comprehensive regulatory information, it’s less of a challenge to spot patterns that might improve how your business handles compliance. It may also aid in identifying and removing possible problem areas, which can help avoid costly delays and fines.
In addition, when you have access to a regulatory intelligence team, you can segment data, specify where it comes from, set up monitoring tools, keep an eye out for changes in the law, and log findings in dashboards. You may keep tabs on data from inside, outside, and other sources simultaneously to get a complete picture of your company’s performance.
This team member can use several resources to accomplish their goals, including data visualization, artificial intelligence, dashboards, event monitoring, data mining, machine learning, and predictive analytics. The work of your regulatory intelligence team can do wonders for your business if the information they provide is accurate, timely, and narrowly focused. They can help you spot opportunities, protect your company’s current standing, and establish effective strategies to propel your business into new international markets.
Maintain a solid reputation
Businesses that do what they’re supposed to do, legally and ethically, provide a certain peace of mind to their customers. Customers are willing to provide personal information, financial resources, and loyalty to these businesses in exchange. Better regulatory intelligence also leads to higher profits due to shorter processes. As a result, companies may make more profitable and effective choices.
A breach in compliance may damage a company’s reputation. Depending on how serious a company’s noncompliance is, the brand’s value and image can have a significant impact. Additional opportunities may be lost as a result of this. Deloitte found that 87% of executives rated reputation risk as “very significant” or “important”, indicating that it is one of their organization’s top strategic risks. In addition, 88% agree that reputation risk management is a top priority for their organizations.
Since regulatory intelligence is constantly generating new information, this enables businesses to adapt quickly to market, regulatory, and competitive needs. The audit reports that verifiable regulatory compliance helps businesses in their marketing efforts.
It is easier for businesses to promote themselves when they comply with regulations and have audit results to back up their claims. Customers are more likely to feel confident in their suppliers when they have access to SOC 1, SOC 2, and SOC 3 reports that prove the company’s continuing compliance with SOX. Once the company fails to produce these reports, it can suffer a considerable blow.
Identify critical incidents that could impact businesses
With the proper regulatory knowledge, your business can expand internationally while mitigating risks, accelerating approvals, and minimizing global regulatory transitions’ financial and time implications. This way, businesses can use regulatory information to foresee problems and manage compliance in advance.
It helps avoid costly delays and penalties by locating and fixing potential trouble spots. Profitability increases when the time to market decreases, leading to better outcomes and more money in the bank. It also allows companies to make smarter, timelier business choices. Your company will be better positioned to meet industry, regulatory, and competitive needs with a continual stream of information.
Preserve regulatory resiliency with little downtime
When you have access to a regulatory intelligence team, you can segment data, specify where it comes from, set up monitoring tools, keep tabs on legislative developments, and log findings in dashboards. At the same time, you can monitor data from within and outside your organization and data provided by third parties.
There has been a rise in the explicit focus on reporting quality indicators to regulatory bodies through the regulatory intelligence team. This team can accomplish their goals using dashboards, event reporting, visual analytics, data analysis, predictive analytics, artificial intelligence, and machine learning.
A regulatory intelligence team in your company can do wonders for your business if they provide timely, cost-effective, and laser-focused reports. These improvements will allow you to spot opportunities better, defend your current positions, and define and implement strategic shifts that will propel your company into new global markets.
Conclusion
The governance, risk, and compliance cycle is incomplete without regulatory intelligence. Your company will stand out from the competition because of its proactive steps to assure compliance. Compliance with regulations is crucial, and failing to do so might cost you your business’s reputation and worth to investors. Get ahead of the competition by including regulatory information in your business intelligence efforts.
About the author: Peter is an AI practitioner interested in competitive intelligence and web change monitoring. He is the CEO of Fluxguard based in Portland, Oregon.
