Companies in every industry must comply with various regulations, but the compliance process often introduces complications. Disruptive testing processes, vague or confusing verbiage in regulations and a lack of visibility open the door for a myriad of issues. Thankfully, new technologies provide a way forward.
Just as digital transformation brings business operations to new levels of efficiency and accuracy, it can do the same for compliance. Here are five such areas in which technology is modernizing regulatory compliance today.
Clarifying Regulations
Regulatory wording must be precise enough to eliminate loopholes yet open enough not to discourage innovation. This verbiage must also be consistent and easy to understand. Natural language processing (NLP), a subset of artificial intelligence (AI) that can analyze and process human language, can help.
NLP algorithms can identify and correct inconsistent language, clarifying regulations. Similarly, it can look for outdated language and update them for a modern audience, making it easier to understand. Over time, these analytics could reveal how regulatory language is changing, guiding faster, more accurate updates in the future.
Improving Accuracy
Leading companies today now use analytical instruments to test products and ensure they meet any relevant regulations. Relying on technology instead of manual checks removes risks associated with human error. A human compliance officer may get distracted or bored, leading them to miss details, but machines don’t have this issue.
As sensor technologies advance, they can offer more granular insight into a product or operation, too. These more detailed readings can help businesses and regulators alike understand why some issues arise, guiding more effective action.
Streamlining Compliance Checks
In addition to making compliance checks more accurate, new technologies perform them faster. Manual checks may involve interrupting a process to measure a sample or observe operations, hindering productivity. Internet of things (IoT) sensors eliminate that concern by enabling continuous wireless monitoring.
IoT sensors can continually gather data and transmit it wirelessly to any relevant sources, providing insight without stopping operations. This real-time remote monitoring could let regulatory bodies check compliance without being physically present, if necessary. These agencies would then be able to check more facilities in the same timeframe and do so with minimal disruption.
Fighting Fraud
Meeting some regulations is a matter of reward, not requirement, which introduces the risk of fraud. For example, sustainable companies can receive government tax benefits, possibly leading some businesses to make fraudulent claims to lessen their tax liability. Remote monitoring technology and blockchains can reduce these concerns.
IoT compliance systems can send data directly to regulatory authorities, reducing the risk that companies could’ve tampered with the information beforehand. Blockchains, which record data in transparent, unchangeable digital ledgers, would further improve visibility. Tampering with a blockchain record is virtually impossible, so recording regulatory compliance this way would reduce fraud.
Guiding Future Changes
As companies seek to implement new changes to their workflows, they must ensure they meet regulatory requirements. Predictive analytics, another subset of AI, can highlight early risk indicators, predicting how a given change might affect companies‘ compliance status. Consequently, businesses can plan strategic shifts and advancements more effectively.
Similarly, these algorithms could analyze risk factors to suggest how companies could shift to meet new certifications or regulations. This guidance would minimize disruption as businesses look to improve their industry standings. Alternatively, regulators could use similar programs to analyze how businesses are evolving to guide new standards.
Technology Makes Compliance Easier for All Parties
Historically, regulatory compliance has been a complicated process for both companies and regulators. These technologies make it easier for both sides, improving efficiency, accuracy and transparency. As technologies like the IoT, AI and blockchain become more common, compliance will meet the needs of a digitally-driven, more agile world.
