As concerns about pollution levels and energy costs grow, regulators are looking to control the trajectory of the industry through regulatory updates that will push energy firms towards green, renewable energy.
However, despite regulators’ best intentions, the rapid push towards a new direction generates several problems for the entities in this industry.
Whether it be energy suppliers or market vendors, organisations face rising regulatory costs and higher incidences of compliance violations that could generate significant losses.
Usage of compliance risk assessment software helps related entities to meet the challenges of keeping abreast with regulations and compliance management, resulting in the optimisation of regulatory management.
The top regulatory challenges that firms are facing
The fast pace of regulatory updates
According to an EY survey, the fast, rapid pace of compliance updates was the industry’s top concern, with over 88% of respondents citing it as a significant concern.
Energy firms are expected to navigate an increasingly complex and ever-changing policy of systems from global, regional, and national bodies. Hence, they are facing difficulty in keeping pace with these expected updates.
Moreover, most of the new systems affect revenue. For example, the UK’s Revenue = Incentive + Innovations + Output (RIIO) system is directly affected by environmental regulation, meaning that revenue levels could be compromised as energy firms struggle to keep up with the relentless pace of updates in the landscape of energy regulation and compliance management.
Lack of consistency and clarity in energy regulation
To rebuild the industry around green energy, regulators have to make significant changes to energy use and requirements, which throws firms into a lurch when adjusting to these updates.
Regulation is further complicated by the requirements set out in the latest updates, which are not specific and can even be revised in the future.
Moreover, there is considerable variance in attitudes and approaches to energy regulation from jurisdiction to jurisdiction, which means little consistency amongst different regulatory bodies.
The lack of consistency is a major concern for over 84% of respondents in energy regulation.
Cross-border regulation is becoming tighter
Regulatory bodies are adopting digital technology to collect and analyse large volumes of regulatory data to improve the supervision of energy firms and even share data with other bodies.
The trend of sharing data amongst regulatory bodies has tightened cross-border regulation, giving energy firms far less flexibility when meeting compliance requirements adding to their list of regulatory problems.
The benefits of compliance risk assessment software in regulation
Compliance risk assessment software identifies regulatory risks within a complex ecosystem of business operations.
Regulatory teams could leverage the software to remediate the most significant compliance risks before their business is hit with penalties from compliance violations.
By deploying risk assessment software, regulatory teams can rapidly resolve the biggest challenges in compliance.
Automated horizon scanning provides the latest regulatory updates
Keeping pace with regulatory updates means energy firms need a solution that can automatically scan for updates as soon as they are published and relay them to the team.
Risk management software offers a feature called automated horizon scanning – which can collect and relay emerging publications from the energy sector.
Powered by machine learning and natural language processing (NLP), automated horizon scanning can get the latest updates within seconds and keep regulatory teams informed on the latest developments without spending a lot of time and resources on compliance management.
Up-to-date library publication to enrich regulatory inventory
Bringing clarity and simplicity to energy regulation requires organisations to build and publish a regulatory library.
A regulatory library functions as a single repository of all relevant regulatory rulings that can be analysed through machine learning technology.
Moreover, regulatory libraries come equipped with advanced technologies such as NLP and machine learning that allow regulatory professionals to highlight relevant keywords and content within large volumes of text. This helps regulatory teams find the appropriate updates faster within a large information repository, making it far more efficient and flexible for compliance.
Moreover, teams can break down and analyse regulatory text to understand how updates could affect business operations, bringing clarity and simplicity to regulation.
Deeper regulatory analysis to optimise regulatory lifecycle management
Regulatory compliance solutions offer analytical features that allow you to turn compliance management into an automated, data-driven process.
This puts organisations in a much better position to respond to tightening standards of cross-border regulation.
By assessing regulatory data, organisations can easily connect rulings to internal operations and close the gap between regulation and business processes.
This can help them identify compliance gaps faster, adjust business operations, and monitor compliance management, giving them the insight to convert regulatory management into an agile, responsive process better suited for meeting the challenges presented by cross-border regulation.
The future of the energy industry and regulation with compliance risk assessment software
Whether you are an energy firm or an energy market vendor, organisations face multiple challenges in energy regulation law due to the large volume of regulatory updates.
Organisations need to redefine their compliance procedures using the ideal risk assessment compliance software to optimise compliance procedures.
This software will be a critical asset in the years to come because it can help organisations optimise regulatory management to respond faster to the challenges presented by the industry whilst ensuring that they are compliant.