Getting Ahead of the Regulatory Curve Ball

Companies must integrate regulatory strategy into their overall business and operational strategies. Those that fail to invest the time up front to understand and influence public policy decisions will experience negative repercussions downstream.

Trends including globalization, industry consolidation, environmental awareness, national security concerns, and corporate scandals have dramatically increased regulatory oversight of today’s businesses.

Public policy has the ability to impact a company on many levels—from how customer relationships are managed, to how products are brought to market, to how alliances are formed, to how commitments to shareholders are met. Whether you are running a life sciences, telecommunications, consumer goods, or automotive company, you can bet the outcome of the decisions made in Washington today will have a major impact on your company tomorrow.

Traditionally, public policy has been the domain of lawyers, economists, and lobbyists. These groups are critical to managing the legal, macroeconomic, or policy elements of regulation. However, the growing scope and significance of today’s regulatory requirements will have downstream operational impacts that need to be understood by corporate leaders. For any given policy, you must understand all the impacts, and then translate them into the right actions for your business.

Companies must integrate regulatory strategy into their overall business and operational strategies. Those that fail to invest the time up front to understand and influence public policy decisions will experience negative repercussions downstream.

You have an opportunity to anticipate how public policy will impact your company and then use this knowledge to inform your strategy in response to pending regulations. Understanding and integrating this insight into your strategic planning process will keep you well ahead of any regulatory curve balls:

1. Assess policies in development—Survey the landscape and assess what policies are in the formative stage. Analyze the risks and threats of each, as well as the opportunities they may present. Learn about their backers and detractors. Score the potential impact of relevant policies on your business. Determine how closely they should be monitored, and decide which policies should be proactively addressed. Once you have identified these key policies, plan your response.
   
   
2. Influence policy decisions—Once you have a deep knowledge of the issues and policies on the horizon, get proactively involved in the public policy process. Mobilize allies, consortia, and interest groups, and execute and adjust your plan accordingly. 
   
   
3. Ensure operational alignment—Ensure your company’s core operations are proactively aligned with emerging policies. For example, if you are a technology company – a new environmental mandate may require you to have a certain level of eco-friendly content within your products by a particular date. As a pharmaceutical company, you may need to proactively ramp up your manufacturing operation to deliver a critical vaccine. As a telecommunications leader, you may need to upgrade your safeguard processes and training to comply with new requirements for consumer telephone record protection.
   
   
4. Comply with long-term requirements—Institutionalize your new policies and procedures to ensure you do not run afoul of the law over the long term. Track your performance consistently, use IT systems to manage compliance, and use the challenge of adhering to regulations as an opportunity to develop a more innovative and streamlined operation.

New policies are emerging every day. The leaders who are responsible for the financial health and market leadership of their businesses must commit to tackling this opportunity head on, or risk losing ground.

Authored by Dan Bowman, a PRTM partner specializing in regulatory compliance, and Scott Hefter, PRTM's global managing director.