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What are regulatory requirements?
Regulatory requirements are rules that businesses must follow. They are invoked by designated regulators and compliance officers: those who make and enforce the rules.
Also known simply as regulations, these obligations can specify different things. For example, qualifications that must be gained, processes that must be followed or records that must be kept.
The purpose of regulatory requirements
Regulatory requirements are hugely important in today’s technological world. With an ever-growing pool of threats, their primary purpose is to protect. In some industries, this means physically protecting the wellbeing of people. In others, regulators aim to protect assets, data and integrity.
Moreover, regulations help set industry-wide minimum standards of practice. This gives potential customers the confidence to make decisions, knowing that they have all the information they need. It also supports the companies themselves to manage risk and reduce the risks associated with harmful protocols.
Finally, regulations help businesses to achieve their goals. By subscribing to the best practices set out in regulatory requirements, companies will find themselves on a level playing field with competitors (no matter their access to resources). Regulatory requirements can help to level the playing field.
Almost every worker or organisation will have to follow some form of regulatory requirement. Some examples of highly regulated industries include:
Alternatively, many professionals are not required to follow regulations. Some of the least regulated professions include the likes of holistic healthcare professionals and management consultants, for example.
What is regulatory compliance?
Regulatory compliance essentially means following the rules. It shows that companies are satisfying the external mandates.
Some companies will have a designated regulatory team or compliance officer. Their purpose is to seek out new, relevant regulations and plan how the company will comply. Regulatory officers may also implement new strategies or processes in order to follow the best practices as part of the compliance framework.
What happens if you don’t comply with regulatory requirements?
A compliance violation refers to the discovery of non-compliance. It could be a single employee who’s not following the rules or a system running through the entire business. Failure to follow compliance frameworks and reporting requirements could lead to further action from the regulatory body.
One of the most prominent regulatory requirements across industries is data privacy, or the handling of personal data. Companies must ensure proper security controls on personal information, and recently, GDPR rules have come into practice. We’ve seen monetary fines and other penalties for companies who don’t follow regulations, proved with an investigation from an external compliance officer.
If you’re struggling to understand your applicable regulatory requirements, CUBE can help.