As the regulatory landscape continues to grow and get more complex, firms need to ensure they are on top of everything. One of the best ways to do this is through regulatory mapping, but what exactly is this?
Ascent RegTech, regulatory knowledge automation platform, has explored what regulatory mapping is and how firms can do it effectively.
It stated that the term can mean different things to each firm. However, there are three core definitions that it falls under.
The first of these is regulatory mapping of laws, rules and regulations to determine the business’ obligations. In this instance, it refers to the process of reading and analysing regulatory text to understand what obligations are relevant to the business.
This process, which can be completed internally or externally, relies on people sifting through rules and capturing baseline obligations across jurisdictions to see where there is overlap.
To do this, the firm typically creates and maintains a rule register or rule inventory, such as all the rules that apply to the business.
The second definition of regulatory mapping revolves around mapping the regulatory changes to the organisation.
Under this definition, compliance teams will scour regulatory websites, newsfeeds and other sources, to capture the latest rule amendments or additions. Following this, they will conduct an applicability analysis to determine which changes apply to the company.
It said, “Compliance personnel must then do the complex work of impact analysis to understand how the changes impact the firm’s existing obligations – Has an existing obligation changed in some way? Are there new obligations due to the rule change? Are any existing obligations now rendered unnecessary due to the change?”
The compliance team needs to answer all these questions before they can update the rule register.
Finally, regulatory mapping can refer to outlining the obligations to internal controls, policies and procedures. Ascent stated that regulatory changes need to flow through a company’s controls and policies to enable proper coordination and execution of the changes.
With the term defined, Ascent outlined that many regulatory mapping processes are getting ruined in the manual labour. It stated that regulatory mapping is a complex web of legal documentation, rule changes and internal processes. Regulatory change management is daunting because sources of regulatory change include international, national, state, and local legislative action, court decisions, and executive actions. Relying on manual and siloed processes is not enough.
This is why firms should seek RegTech solutions to help. Ascent said, “The explosion of RegTech now provides an alternative solution to managing the challenge of regulatory mapping that does not require throwing additional personnel, time, and resources at the growing regulatory burden. The right automation tools can help alleviate much of the manual work of mapping regulatory requirements (regardless of which definition you are focused on)—but only if the tools are well-designed and implemented.”
Some of the benefits of using technology are, the ability to convert regulatory text into specific obligations, streamlining regulatory change capture processes, freeing staff of manual tasks, a greater regulatory landscape understanding and more.
Read the full report here.
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