Almost every business in the country is bound by regulations. There are regulations that govern the way a business can treat its employees, the way it can operate in its environment, and so on. Different industries have varying amounts of regulation. There are industries where regulation is minimal, and businesses are generally not worried about regulatory bodies breathing down their neck. Then there are industries where everything is governed by regulations – where there are so many regulations that businesses and their processes must be designed according to these regulations. These businesses need to worry about the actions of the regulatory bodies and regulatory changes a lot.
A simple way of understanding why some industries are heavily regulated while others aren’t is to look at the impact the industry has on the rest of the country and society. Businesses that are self-contained tend to not be heavily regulated. Governments do not have to worry what the computer repair shop down the street is doing, because even if they do something wrong the damage will be limited to a few of its customers. Becoming a tutor is also easy – there are almost no regulations, because, again, even if the tutor does a bad job the damage will be limited to a few individuals and even to them the damage will not be too much.
However, there are industries where a mistake can be catastrophic, and that is what governments worry about the most. The healthcare industry is a good example. Doctors, nurses, hospitals, administrators – every single person involved in the healthcare sector, even the pharmaceutical representative, are subject to heavy regulations. They must do things according to regulations or their licenses to operate in the industry can be revoked. The reason behind it is simple – a mistake in the healthcare industry can cost people their lives.
The energy sector is another good example. Energy is of vital importance to society and mistakes in generating energy can be catastrophic. Oil and gas companies can end up polluting the ocean and lands. Nuclear power is also heavily regulated, because a mistake in a nuclear power generating plan can be potentially catastrophic.
When you look at the industries that are heavily regulated by the government, you will notice that most of them can generate a lot of harm if something goes wrong. Then you see that the financial sector is also included in the list of the most heavily regulated industries. This may seem like an odd fit in the beginning – the financial sector cannot blow up to kill people and pollute the land, it cannot kill someone through malpractice, it cannot result in a nuclear reaction, so why regulate it so heavily?
The simple answer is that the financial industry may be the most important industry out of all these when it comes to having the capability to damage the rest of the economy. We saw this in the financial crisis in 2008. Due to the bad practices of a limited number of banks, the whole economy was at risk. People lost their retirement funds. Multiple businesses faced bankruptcy. The effects were not limited to the USA either, even though the problems originated there. The whole world reeled from the effects.
The simple reason behind this is that the financial industry is the backbone of the global economy. Every business that is traded, every payment received, every loan acquired for expansion, every international transfer – everything is handled through the financial sector. While the financial sector itself might not seem to add a lot of value to everyone’s lived, but it powers the whole economy and enables it to function and grow. That is also why there are so many regulatory changes in the financial sector – governments know that a problem in this sector can be catastrophic, thus they try to course correct as often as they can.
Now – we all know that regulations are written in legalese and published by regulatory bodies, which does not seem like something that a software application could help with. However, regulatory change management software can play a vital role in heavily regulated industries, and is a common sight in banks, hospital, energy companies, and other heavily regulated businesses. This software allows businesses to ensure that they are complying with the laws and regulations that govern them.
This software can automatically detect changes in regulations – often time there are only small changes among hundreds of pages. If risks are mapped in the software, then the software can even tell you what you need to change in your business to comply with upcoming regulations. These features enable businesses to comply with new regulations quickly and painlessly.