May 12

What is the purpose of regulatory compliance and how to leverage it successfully?


With energy regulation becoming more complex, compliance management is consuming more resources and taking more time to complete, taking up a bigger portion of corporate budgets relative to the value they bring in.

This calls into question the true value of compliance management relative to the time and resources required. Despite the perception that regulatory management is an inefficient exercise, it is possible to draw genuine value from compliance procedures.

The key to extracting genuine business value from energy compliance and regulation is to determine what is the purpose of regulatory compliance and leverage this understanding to supplant our internal operations. 

In this article, we explore the importance of regulatory compliance and how to leverage it to accomplish business objectives. 

What is the purpose of regulatory compliance? 

It is easy to see energy regulation as a series of complex rules and obligations, but once we understand the purpose behind regulatory updates, it becomes easier to understand its value and how it could help, improve business operations. 

Energy regulations often arise in response to strategic goals set out by the government, for example, the UK’s roadmap to carbon neutrality by 2050 had a substantial impact on energy regulation because it uses regulation as a mechanism to accomplish a country’s goal.

However, there are times when regulation is used to mobilise a response to a disruptive development. For example, recent events in Eastern Europe have prompted governments to reduce dependence on 

energy imports from Russia and regulatory developments will be seen as an extension of that goal. 

Finally, energy compliance ensures that you are following best practices and that any internal operations reduce harm to the environment, create a more transparent business, and ensure that the industry continues to grow at sustainable rates. 

This all but ensures that organisations can grow in sustainable ways and follow best practices. 

How to turn regulation into a more value-oriented process? 

Leveraging energy compliance successfully requires shifts in regulation and compliance management strategies. 

Take a proactive approach to energy regulation

A pre-emptive approach to compliance is becoming the favoured strategy amongst multinationals because it highlights compliance gaps, preventing violations before they are found by regulators. 

Moreover, it can help organisations create a more transparent business where there is a greater awareness of the different departments and business units, which is invaluable in a multinational where optimising systems for pre-emptive management can be difficult. 

Regulatory horizon scanning tools and third-party databases are some tools that can help with attaining preventive, proactive, and predictive financial regulation.

Leverage third-party risk testing

When asked if third parties could impact their growth, 22 per cent of respondents said yes, while another 66 per cent said third parties were currently in scope. 

Cloud technology has made third-party operations far more important and riskier at the same time, so it is a prudent decision to account for third-party risk in compliance operations. 

Accounting for third-party risk ensures that any interactions with other organisations are weighed carefully and scrutinised, preventing any compliance violations. 

Furthermore, it ensures that you are following best practices at all times and ensure that all third-party operations add value to the organisation.

Understanding the why and how behind regulation 

Understanding the why behind a regulatory updates ensures that stakeholders, staff, and other critical business units across the entire value chain make it easier to abide by compliance regulations, for they will be more focused when handling regulatory content and less likely to breach the rules. 

Having a better grasp of regulatory content can help organisations align regulatory compliance management with the organisations’ overall purpose and values, which is critical for turning compliance management into a more value-oriented process. 

Use data and analytics 

Leveraging technology, like advanced analytics and big data, can help financial institutions (FIs) optimise compliance management to reduce costs and improve productivity. 

The technology can prevent expensive compliance failures and eliminate redundant processes, reducing compliance costs. 

Furthermore, advanced technology allows financial institutions to make the most out of their rich data set, raising reliability levels and improving efficiency in compliance. 

Leveraging regulatory analytics and big data allow organisations to utilise next-generation governance, risk and compliance systems to make the process more cost-effective.

Maximising value from energy compliance

With exogenous events destabilising the energy industry, it is important to understand what is the purpose of regulatory compliance to get a better understanding of how energy compliance management works. 

When you have a better understanding of energy compliance, it is much easier to understand how regulation can enrich our business operations. 

This can help reduce the regressive effects of compliance management while building out the benefits of energy regulation, allowing us to turn what can be a cumbersome operation into a value-oriented process.


Compliance Strategy, Regulatory Compliance, What is The Purpose of Regulatory Compliance

You may also like

Get in touch

0 of 450