Regulatory risk examples-How to manage regulatory risk?

 Regulatory risk examples and how to manage them?

The regulatory risk is that changes in laws or regulations will materially affect the business, sector or market. Regulatory changes drive business, reduce investment attractiveness, change competitive landscape ، Or even the cost of making some business practices illegal may increase. Regulatory hazards can arise from various sources, such as government policies, international trade agreements, environmental regulations, consumer protection laws, tax reform, and anti-trust enforcement.

In this blog post, we will see some examples of regulatory risk that have affected various industries and sectors in recent years. We will also discuss some strategies and best practices to handle regulatory risk and reduce its negative impact on business performance.

Examples of regulatory risk

Here are some examples of regulatory risk that have taken place or may have occurred in various industries and sectors:

 Big Tech:

Big Tech Companies, such as Meta ( First Facebook ), Amazon, Google, and Apple ، There is a significant regulatory risk in the field of non-confidence enforcement. This is largely the result of their strong and still growing market power and a growing public response to social influence. Several governments and regulators around the world have launched investigations and litigation against these companies ، And they have accused them of abusing their dominant positions, engaging in anti-competitive methods ، Violate privacy rights and disseminate misinformation. These measures may result in heavy fines, fines, orders, or even forced breakdowns of these companies.

Financial Services:

The financial services industry is subject to complex and developed regulations aimed at financial stability, consumer protection ، Ensuring fair competition and compliance with tax laws. Some examples of regulatory changes that have affected the industry include the 2002 Serbian-Oxley Act ( SOX ).

 Which has established more stringent accounting requirements and more severe criminal penalties for violating securities laws; the 2010 Dodd Frank Act, which has established banks, hedge funds ، Introduce clear improvements to the regulation of derivative markets, credit rating agencies, and consumer financing products 3; and the 2018 General Data Protection Regulation ( GDPR ) ، Which enacted strict rules on how the personal data of EU citizens can be transmitted through collection, action and business.

Manufacturing:

The manufacturing industry faces a regular risk of various environmental and health regulations aimed at pollution, greenhouse gas emissions ، Reducing waste production and resource consumption. Some examples of regulatory changes that have affected the industry include the 2015 Paris Agreement on Climate Change, Which has pledged to limit global warming below 2 ° C to 200 countries above the industrial level۔ 2017

Kigali Amendment to the Montreal Protocol on Ozone Depleting Substances, which Hydrofluorocarbon ( HFCs ) ، Step-by-step use of a powerful greenhouse gas used in refrigeration and air conditioning۔ And the 2020 Basel Convention on Effective Waste, which limited the export of plastic waste to developing countries.

How to manage regulatory risk

Regulatory risk can pose significant challenges and risks to business, but it can also create opportunities for innovation, growth and competitive advantage. The key to managing regulatory risk is to adopt an active, strategic and comprehensive approach that includes the following measures:

 Monitor:

Businesses should monitor the regulatory environment and identify possible changes that can affect their functions, products, services, markets or consumers. They should also monitor their compliance performance and identify any gaps or weaknesses that can expose them to regulatory scrutiny or fines.

Evaluation:

Businesses should assess the impact of regulatory changes on their business objectives, strategies, processes, systems, and stakeholders. They should also review their readiness and capacity to respond to regulatory changes and implement the necessary measures.

Reduce:

Adjusting business to your business models, revising their policies and procedures, upgrading their technology and infrastructure ، Appropriate measures such as training of your staff should reduce the negative effects of regulatory changes, and engage with regulators and stakeholders. Entering new markets, developing new products or services ، Or the positive effects of regulatory changes should also be taken advantage of by capturing new opportunities such as enhancing their reputation or brand value.

Overview:

Business should review the performance and results of its regulatory risk management and measure their effectiveness and performance. They should also review their regulatory risk management framework and processes and improve or make adjustments as needed.

By following these measures, businesses can manage regulatory risk systematically and actively and transform it into a competitive advantage.