How Regulatory Changes Affect Businesses

Most of us do not spend a lot of time thinking about regulatory changes, because there are rarely any regulations that affect our personal lives. However, if you are a small business owner or in an executive position in a larger organization, you will know how important these regulations can be. These regulations are basically the rules which every business has to follow. A change in rules means that what a business can do and cannot do has changed, which means that everyone is now playing by different rules. 

An easy way to understand what these changes means is to think of them as the games of a sport. Think how things would change if NBA decided to change the rules and eliminated the concept of a three pointer. This won’t simply mean that the basketball players will stop attempting three pointers. Three pointers are factored in the strategy of a team. If three pointers were to be eliminated, teams would have to change not just how they play but who they play. The players who primarily scored 3 pointers would no longer be good enough for teams, and the strategy to play the ball out and then attempt a 3 pointer would no longer be viable. 

Instead, the whole team will try to get as close to the basket as possible, resulting in more scrimmages. The fundamental nature of basketball would change if the rules were changed. The same is true for businesses. Generally, the changes in regulations are not as drastic as eliminating 3 pointers, but they can have vast ramifications for the businesses. 

Changing business strategies according to regulations  

The most difficult thing to change for a business is a strategy which took years to pursue and implement. Think of a bank that decides to focus on a particular section of the market and builds a respectable market share. What if there are new regulations which change the way that market is categorized or disallow a business from offerings its services to the people in that market. Such a change would mean that the plans of the business need to be changed. These plans constituted the vision of the business.  

A business cannot just change completely in a matter of days, especially if the business is a large enterprise. That is why businesses now focus on regulatory change management. If the business is operating in an industry where regulatory changes are frequent, it needs all the help it can get to manage all the effects of any regulatory changes. There are two main ways business manage change – anticipating the change and analyzing the change.   

Anticipating regulatory changes 

Businesses keep a close watch on the announcements made by regulatory bodies, because they can often shed light on upcoming changes. Many businesses also use regulatory intelligence technology to anticipate these changes. There are software solutions which collect all the information about regulations and provide it to businesses in a single feed, ensuring that they will have access to all available information about upcoming regulatory changes. Large enterprises often hire people specifically to anticipate and manage regulatory changes, while in smaller organizations the work may be handled by the risk and compliance departments.  

Analyzing regulatory changes 

Once the changes are final and the business has a limited number of days to implement the required changes, the next step is to analyze the regulatory changes to understand how they will affect the business. This means that the business will have to perform an audit of all the parts of the organization that will be affected by the changes. This is a complicated task because it requires collaboration between the whole organization and an in-depth investigation of all the documentation of the organization that may be affected by the regulatory changes. 

Many businesses have now automated and streamlines this process with the help of technology. Regulatory change management software can quickly analyze all the compliance documentation and highlight all the parts that will be affected by the regulatory changes. This saves the organization a lot of time, because instead of devoting many days to simply discovering what the changes are, they can go directly to implementing the required changes and becoming complaint with the new rules.