Posted by Christopher Spoth, Executive Director, Deloitte Center for Regulatory Strategies, on February 19, 2016
Each year, the Deloitte Center for Regulatory Strategies publishes a series of outlooks on what the coming year may bring. Each one focuses on regulatory challenges that are unique to a particular industry. But perhaps the greatest lessons I find in them are the challenges that aren’t unique—the priorities that will likely shape the next 12 months for business leaders everywhere.
What do I see in 2016? A year of transformation. New tools are changing the ways regulators define their jobs. Organizations that recognize the changes have an opportunity to apply several lessons to their regulatory strategies:
Whatever business you’re in, you’re in the data business. As operations and rules become more complex, understanding and controlling them requires strong data. After all, analytics is only as good as the data that feeds it, and the data is only as good as the gathering and governance that delivers it to the table. A company that merely hands over data to regulators who request it will likely learn about its compliance performance from them. A company that masters data should be self-aware enough to identify regulatory problems before regulators do—or even before problems develop.
Compliance has to be a cost, but it can also be an opportunity. All the effort and expense a company puts into satisfying regulators can be a sunk cost if the insights just walk out the door. But all that information and analysis can serve a company’s own purposes by refining and enhancing operations. The same insight that flags a problem can also spotlight a solution. It takes imagination to account for compliance this way: Instead of measuring cost-cutting alone, find the balance point of efficiency and effectiveness that indicates a compliance program is both preserving and creating value.
Action is preferable to reaction. Which is preferable: To hear about a problem in your own company because regulators tell you about it? To read about it in the news? Or to find and fix it yourself? Trick question. Your aim should be to head the problem off before it erupts. It’s hard for a company to make that happen by issuing edicts from a siloed compliance office. By the time awareness of a compliance issue has traveled up the chain of command and back down again, it may be too late. The solution is to build “spirit-of-the-law” compliance into a culture that has a bias toward action.
There’s one more element that makes 2016 a year of transformation—for us. It’s my privilege to succeed Tom Rollauer as the executive director of the Center for Regulatory Strategies, and to reaffirm Deloitte’s global commitment to making our team a resource for every client organization. In our annual outlook series, you’ll see the latest thinking our practitioners bring to the industries they know so well. I know I’ll enjoy working with all those seasoned professionals throughout the year ahead. My hope is that you get a chance of your own to see what they have to offer.