Three important questions CEOs and managers ask when it comes to compliance with regulations are:
In order to answer these questions, there is a need to evaluate the best practices which are being implemented. There is also a need to understand the features of good quality regulation. This will provide a better understanding in order to manage this knowledge with best practices.
One cannot anticipate or predict the circumstances of a regulatory principle. If a regulation worked well today, it most probably will not work tomorrow. There are some key best practice regulators and compliance indicators which are important for detecting regulation vulnerabilities. These are:
Growth Supporting Regulations: Economic objectives are the basic principle in this regulation best practice. The indicators here are identifying and justifying trade-offs, decision making, and open and competitive markets. This is a best practice which is applicable where appropriate and in compliance with regulations.
Proportionality in Regulations and Benefits: This requires ensuring that the regulations do not over burden the benefits which are expected. The indicator for this regulation is placement of a “risk based – cost effective” framework. This should maintain a balance between rule-making and implementation of compliance.
Flexibility and Durability: These regulators are based on targeting certain achievements and working towards them. The regulatory system must have the capacity to accommodate changes as circumstances change. The indicators here are; performance or compliance with principles, feedback systems and controls must be in place. Decision making must be reviewed regularly, and the regulatory body must be up-to-date with information on markets and technology.
Predictability and Accuracy: There must be predictability of outcome from regulations. A proper advisory authority, criteria for decision making, long term investment plans and consistency in compliance are the main indicators.
Transparency and Accountability: The regulations must be clear and easy to implement as a best practice. Decisions made based on the regulations must be justifiable, and have accountability.
Capability Regulators: The regulation must be capable of supporting the system. It must be operable and effective for best practices. Indicators for this regulation are assessments on the capacity at regular intervals.
There are certain attributes of regulations which are important for maintaining best practice and compliance. Knowledge about these attributes is equally essential.