How to Use Technology to Manage the Cost and Complexity of Business Regulation
Executives in senior management face many challenges, and chief among them might just be the growing cost and complexity of regulation. As a result, regulators are under pressure to increase efficiency and response times, as regulatory backlogs can have serious impacts on business innovation and growth.
The good news is advances in technology can help regulators and businesses work together to improve regulatory processes for the benefit of all.
The Regulator’s Role
The goal of a regulator is to protect consumers without stifling business innovation. After all, consumers do benefit from product and service innovations, so the long-term impact of regulation on innovation must be a consideration.
However, regulators face several challenges in their work:
- Labor-intensive work: Many regulatory tasks, like inspections and compliance reviews, are labor-intensive. As the number of tasks grows, regulatory bodies may not have sufficient budgets to hire enough staff to handle them all in a timely manner.
- Industry pressure: To support business innovation, regulators are under pressure to process work faster and be more responsive. If regulators can’t keep up with growing workloads, companies may need to raise the issue with lawmakers, who may demand improvements.
- Backlogs: As the number of applications, required inspections, and other tasks grows, regulators may quickly fall behind, which creates large backlogs of pending tasks. As an example, the US Patent and Trademark Office reported an unexamined patent application backlog of 526,579 items at the end of fiscal year 2017.
To meet these challenges, regulators must use technology and work with the business community to change the regulatory process.
A Plan for Improvement
To increase productivity and meet the demands of stakeholders, regulators must plan for improvement based on these factors:
- Adapting to change: Existing systems are not sufficient, and regulators must change to serve the public and other stakeholders. Regulators must adapt, which may require an investment in technology and training.
- Understanding the impact of technology: Nearly every aspect of life is impacted by technological innovations, and it is important to understand how systems are changing. Cloud computing, for example, is rapidly eliminating the need to keep paper files. A regulator must understand how relevant new technologies work to take advantage of them.
- Identifying unnecessary regulations: The sets of regulations used to oversee industries often include rules that are outdated. Every regulator needs a process to identify and report on outdated rules so that they can be considered for elimination.
The business community, regulators, and other stakeholders must work together on these factors to improve the regulatory process for everyone. Otherwise, regulatory costs will continue to increase, backlogs will balloon, and innovation will suffer.
Actionable Tips Using Technology
The solution to the cost and complexity problem is technology, and both regulators and businesses can implement new systems to make the regulatory process more efficient:
- Routine tasks: Every organization has its routine tasks, and automating these tasks saves time and allows staff to focus on more critical work. A good example is managing inbound calls and questions. Artificial intelligence allows organizations to create virtual assistants to answer frequent questions. A business can create assistants to answer compliance questions internally, and a regulator can use the technology to free up staff time.
- Predicting areas of risk: Big data analysis can be used to review substantial amounts of data and identify areas of risk. A regulator can use the risk analysis to focus resources where they are needed the most. The New York City Fire Department, for example, uses regression analysis to determine which buildings are most vulnerable to fire, and it focuses fire inspections on that particular set of buildings. Big data allows regulators to get better results with limited resources, and companies can also use big data to identify compliance risks internally.
- Simplifying procedures: Finally, robotic process automation (RPA) can be programmed to replicate the steps a human would take to complete a task, such as filling out a required compliance form. As an example, RPA can make the compliance process easier by highlighting required fields in an online document.
Applying technology to regulatory issues requires time and effort, but the payoff for businesses and regulators can be substantial. Working together, both parties can find ways to make improvements so that the public interest is protected and business innovation can continue. Everyone can benefit.
Paul Jarrett is founder of Renaix.