Regulatory change management has become an integral part of business operations as energy vendors and producers reassess their attitude towards energy compliance.
With governments scrutinising compliance procedures more heavily and willing to implement harsher penalties for those not following rules, it is important to ensure that the compliance management processes can keep up with the demanding procedures.
In this blog, we account for the challenges of regulatory change management and how best to overcome them.
Why is regulatory change management a challenge within the energy industry
Here are some of the reasons why regulatory change management is difficult to accomplish amongst organisations operating within the energy industry
Lack of clarity and understanding over business rules
Businesses operating in this space are often confused by the lack of specific details and rules within the energy regulatory process. This lack of specificity makes it impossible to determine.
In addition to the lack of specificity, most energy rulings lack clarity, for there is no clear purpose on why certain processes must be done, leaving firms confused.
Data reporting is too frequent and overlaps
Energy regulation often comes with frequent data requests that often overlap. These requests are complex because they come from different regulatory bodies and are expected to be presented in different formats, which makes regulation more complex and demanding for firms.
Having to divest time and resources towards compliance reporting also undermines operational efficiency and forces them to divert resources away from other critical procedures.
Short-term regulatory laws vs long-term industry
Given that energy regulation can sometimes be vague and not very specific, it can be difficult for firms operating within this space to take on investment opportunities because all projects can take years, if not decades, to materialise.
However, rulings from energy regulators do not follow a similar pattern and will be amended frequently, creating a rather unstable regulatory process.
What is the best way to improve change management in energy regulation?
Given the challenges facing firms operating in the energy industry, we cannot stress the importance of RegTech solutions; these platforms can help you optimise regulatory change management by streamlining complex, time-consuming processes.
Identify critical regulatory obligations
RegTech solutions can help you identify the most relevant, critical obligations found in regulatory obligations performed by regulators such as Ofgem.
Given the large volume of regulatory content that comes from regulatory institutions, smart platforms can break down the data and make it more accessible.
This can happen in several ways, for example, converting text into scannable PDF files for easy viewing and assessment.
Institutions can identify the most important rulings to follow and tweak them accordingly.
Moreover, regulatory updates will be easier to account for because RegTech solutions can highlight obligatory and critical rulings.
Streamline critical compliance procedures
RegTech solutions are designed to streamline critical procedures that include (though they are not limited to) compliance reporting.
By using a combination of machine learning and NLP, RegTech solutions can assess data at significant rates and allow regulators to compile reports in a short time.
Furthermore, there are additional functions found in RegTech platforms that can benefit organisations.
For example, these platforms can perform a self-assessment check, making it easier to determine compliance gaps; this option, when combined with regulatory alerts, would allow firms to keep up with the latest updates.
Assess regulatory data
RegTech platforms can leverage interactive, customised graphs, charts, visualisations, and dashboards to assess compliance methods.
This will provide valuable insight into regulatory processes, delivering better insight into an organisation’s compliance procedures.
Firms can use the insight derived from regulatory intelligence to better understand current regulatory processes.
The additional insight can give firms the extra edge they need to thrive in a complex regulatory environment.
Turning regulatory change management into a more efficient process
Regulatory change management is critical for keeping up with the latest updates in compliance regulation. With the energy industry expected to undergo significant changes in the next few years, organisations need a solution that allows them to meet compliance requirements, even if they are recent updates.
By investing RegTech platforms, energy firms are in a better position to respond to regulatory updates coming from different regulatory bodies because the technology turns change management into an efficient and agile process, allowing firms to respond to changes far more quickly.
With RegTech platforms, firms operating in the energy sector will have an easier time optimising regulatory change management.