Regulatory issues are beginning to creep up risk registers, as companies in Asia spread their operations globally, says the regional director of JLT Risk Consulting in Asia, Craig Paterson.
Increasing regulatory burden and their cost implications:
As Asian economies grow, the regulatory environment will adapt to ensure it continues to govern businesses well. The ability to deal with new regulations and the associated costs of implementation (and penalties for non-compliance) will affect business confidence.
Inability to fully understand overseas regulatory requirements:
For many companies in Asia, growth opportunities exist outside their own geographical borders. This in itself brings new regulatory risks, as a lack of understanding of requirements in different countries can cause a failure to meet obligations.
Changing interpretation of new and existing regulations:
Changing technology means that existing regulations may be interpreted in different ways to meet changing needs, leaving businesses exposed to new and unquantified factors.
Complex untested regulations:
In a number of instances, regulations may be in place but they may never have been tested in a court of law. Therefore companies are exposed to regulations being interpreted differently from what was originally expected.
Changing business environment:
The regulatory environment may struggle to keep abreast of changes in such areas as technology, operations and corporate governance, which can expose companies to unforeseen losses or a lack of legal recompense.
Lack of consistency in the regulatory environment:
Across Asia, multinational corporations encounter different cultures and conventions in doing business. This is reflected in myriad regulations that are in place and a lack of consistency across the region.
Lack of in-house regulatory and compliance experts:
There is a lack of expertise in overseeing internal regulatory functions in the region, so many companies resort to using third-party experts. While helpful in the short-term, it does not build up a bank of knowledge within the firm on these types of issues.