Regulatory Impact Analysis: Best Practices In OECD Countries

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Regulatory impact analysis (RIA) includes a variety of techniques aimed to systematically assess the positive and negative impacts of existing and proposed regulations. The development of RIA is now very common among OECD countries as a part of regulatory management. It is mainly aimed at improving governments’ regulatory powers.

Properly planned and functional RIA can increase the efficiency and effectiveness of governments. It can also help address economic issues and other problems such as competition and globalization.

RIA is a tool that is used as a guide to improve the quality of decision-making. Additionally, it also improves accountability and public involvement in the decision making process. Most countries now use RIA in regulatory decisions mainly due to the benefits it has. Representatives of OECD countries in May 1997 endorsed a recommendation in the OECD Report that says that governments should ‘‘integrate RIA into the development, review, and reform of regulations.’’

The report also describes best practices following in this regard. They are:

1. Maximize Commitment

All the decisions should be taken with the view to maximize benefit. The main aim should be to maximize the output with minimum input.

2. Allocate Responsibilities Carefully

It is very important to allocate responsibilities carefully so that everyone performs at the optimum level. Those performing any job must be efficient at doing so. If the right person is not appointed for the right job the results may not be reliable.

3. Train the Regulators

It is very important for regulators to be properly trained so that they can make decisions correctly. Regulators need certain characteristics without which they cannot be considered competent.

4. Use the Right Analytical Method

There are many tools of analyzing a situation; however, not every tool is the right one. It is very important to wisely choose a tool so that the right results are derived.

5. Develop and Implement the Right Data Collection Strategies

Data should be collected with care. The strategies selected should be consistent yet flexible so that they can change if time requires so.

6. Target Aims

RIA should be prepared for a specific goal. One assessment may not be applicable to other scenarios simply because the impact changes from case to case.

7. Integrate RIA with the Policy-making Process

This point is very important. RIA should be a part of policy making from the beginning so that big changes are not required in the end.

8. Communicate the Results

RIA is not of any use if the results are not communicated properly. All the details should be clearly communicated to the intended party so that a decision can be made.

9. Involve the Public Extensively

The OECD countries believe in making the public a part of the whole process so that it is transparent. Public involvement is also said to help increase public trust in the government.

10.Apply RIA to Existing and New Regulation

RIA should not only be applied to new regulations but also to the regulations that are always in place so that their efficiency and impact can be measured. This is mainly done due to the fact that the external situations are continuously changing.

Further reading: Corporate Governance | Audit | Performance Improvement

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