RegTech Is Challenging the Status Quo
Over the years, technological advancements have changed the way many companies do business. It’s now also changing the ways in which they meet their regulatory requirements. More and more, companies are adopting regulatory technology (RegTech) to address the challenges posed by demonstrating compliance. RegTech is an important tool to help companies gather complex information and then validate and analyze it to streamline the regulatory process.
RegTech & Compliance Challenges
A decade ago, most companies acquired vital regulatory compliance data through time-consuming email campaigns executed on rudimentary email software. This data was then stored in cumbersome spreadsheets, siloed away until requests filtered through to unlock them.
Today, companies have expansive supply chains that stretch across the globe, incorporating hundreds of companies and thousands of parts. Reliance on outdated manual processes threatens to overwhelm compliance programs, increasing the risk of lost market access, financial penalties, and reputational harm.
RegTech is provided in numerous forms, all with varying capability, but all share a similar value set: handle more data in less time. The benefits extend beyond speed. Streamlined data collection through regulatory technology frequently leverages industry-standard data formats, resulting in cleaner data for fast and accurate validation. Comprehensive, accurate data is crucial to compliance with every regulation around the world.
Looking for a RegTech solution to your compliance challenges? Download Digital Transformation & Transparency: A Guide to Mitigating Supply Chain Risk to learn how to best implement a new solution.
How RegTech Helps With Transparency
Companies are often far removed from the actions of their most downstream suppliers, but they are not removed from the risks they pose. For example, Apple has an extensive supply chain and, in the later parts of the last decade, had limited visibility into the mines that supplied the ore used in their products. In 2019, Apple and other tech giants were named in a lawsuit over the conditions of mines in their supply chain. Since that time, Apple has made great strides in enhancing transparency in its supply chain, relying heavily on technology tools.
Transparency helps companies root out problematic suppliers or enhance the working conditions for those in their supply chain. It can also help identify substances of concern in products, providing a clear picture of risk and enabling the proactive response of companies before operational disruption or brand damage occur.
With regard to product compliance, transparency is best unlocked through full material disclosures (FMDs). These disclosures are robust data sets that can help companies spot risks sooner and streamline compliance processes. RegTech alleviates the data burden of gathering and compiling the complete part and substance information necessary for FMDs. For example, a RegTech platform that automates data collection is able to engage, collect, and store data from all the suppliers connected to a specific part in one action. A human using email would take several actions to find the correct contacts, connect with them, retrieve, validate, and store information. That takes time and costs money.
RegTech also helps mitigate the risk that parties in a supply chain pose to a company. Through recognized tools such as the Conflict Minerals Reporting Template (CMRT) or Slavery and Trafficking Risk Template (STRT), companies can survey their supply chain to gather data and score suppliers for potential risks. Supply chain engagement yields the best results when executed efficiently, exactly where RegTech excels.
Adoption of Regulatory Technology
According to the State of Compliance 2020 report, companies surveyed about their compliance programs reported a moderate move toward digital transformation. Of the companies polled, 85 percent indicated some digital transformation occurred across their organization. Of those that adopted RegTech, in full or in part, satisfaction with compliance programs was rated more highly than companies with no technological solution. Year-over-year activities have seen a decrease in the reliance on manual programs, with the report showing a drop of 12 percentage points in companies using solely manual email campaigns to handle compliance.
Companies are not the only ones applying technology to regulation. The new Substances of Concern in articles, as such or in complex objects (Products) (SCIP) database, mandated by the European Union (EU) Waste Framework Directive, marks a step toward increased use of technological solutions in regulatory requirements and enforcement. The database will house complex data sets that are publicly-searchable by downstream users and requires submission through a portal by companies or system-to-system transfers. These all but require RegTech in order to satisfy the requirements.
Assent’s RegTech Offering
Assent provides a comprehensive RegTech solution to companies, enabling large-scale collection of complex supply chain data and streamlined reporting capabilities, and providing a centralized dashboard to facilitate communication and collaboration across an organization. Leveraging AI and machine-learning, Assent provides a clear regulatory risk profile to companies addressing multiple areas of concern, ensuring continued market access, protection from financial penalties associated with non-compliance, and mitigation from brand damage. To learn more, contact our experts.