Overcoming the Regulatory Divide with a Holistic Approach to Change Management

Here are some key takeaways from the RegTech Summit NYC 2024 by Susie Mackenzie, Head of Legal and Regulatory Analysis, Corlytics.

The pace of regulatory change shows no sign of slowing down as we continue to see regulatory attention on areas such as climate change, cyber resilience, consumer protection and data protection. The breakneck speed of technological advances is driving an environment in which both industry participants and regulators are being pushed to adapt quickly. Shifting global political dynamics are also likely to drive ongoing regulatory divergence creating a challenging compliance landscape.

For insurers, particularly, the ability to identify, track and respond promptly to upcoming regulatory changes – whether prompted by new administrations, shifting policy priorities, or international agreements – is critical.At the recent panel discussion at the RegTech Summit in NYC, I was part of, several key themes emerged, as we discussed managing these challenges with effective regulatory change management strategies.

The solution – an end-to-end regulatory framework

As discussed on the panel, there is an increasing call for comprehensive, end-to-end solutions to manage regulatory change. Such solutions streamline the identification and tracking of upcoming changes, provide workflow solutions which allow for impact assessments and ensure accountability by allocating responsibilities for updating policies, controls and procedures. This approach ensures a complete digital trail, which is critical for transparency and demonstrating compliance to regulators.

A cornerstone of effective regulatory change management sits in the initial identification of upcoming change through effective regulatory monitoring. In order to do this effectively there is a need to ensure that the entire regulatory universe in which a firm operates is captured. By casting a wide net beyond just primary regulators to include other entities such as industry bodies firms can ensure they capture all relevant updates early. This approach not only enhances accuracy in impact assessments but also mitigates the risk of compliance gaps.

Effective regulatory monitoring also requires the means to ensure that relevant information is categorised and filtered appropriately. Such a process ensures that updates can be appropriately assigned and actioned. A key tool for achieving this is through the use of taxonomy to classify regulatory monitoring publications, whether that be by business line, risk category or theme. This structured method reduces noise and focuses resources on what matters most.

Diverging regulatory landscapes

Recent global political changes are likely to drive future regulatory divergence, in particular between the US and EU. Crypto and ESG frameworks are examples of where we are likely to have differing approaches to regulation. Compliance frameworks need effective systems to track regulatory changes across jurisdictions, identifying consistencies and divergences. Leveraging AI

As the initial hype surrounding AI settles, we are seeing its great potential within regulatory change management applications. It shows great potential in summarisation, gap analysis and in identifying consistencies and divergences across jurisdictions. However, the challenge for the industry going forward is to ensure that the tools that are used for work with regulation meet the standards of accuracy, transparency and accountability.

Turning complexity into opportunity

In the increasing regulatory fragmentation environment, it is becoming critical for companies to adopt holistic solutions that combine dynamic approach, advanced technology, robust processes and comprehensive regulatory coverage.

By doing so, firms can achieve proactive resilient frameworks to support their sustainable growth. The path forward lies in striking a balance between innovation and accountability, ensuring that regulatory compliance becomes not just a necessity – but rather a strategic advantage.

By addressing these priorities through strategic investments in holistic technology and comprehensive regulatory oversight, firms can be better equipped to navigate these fast-changing complexities.