Most regulatory functions use a risk assessment method to inform decisions on the frequency of inspection and enforcement action in the event of non-compliance. This raised the question of how to further improve the approach to assessing likelihood of businesses complying and targeting finite regulatory resources. For example:
- Could a common approach to assessing confidence in management be applied by different regulators? If so, might regulators be able to share their assessment results and thereby reduce the need to separately inspect each area of regulation?
- Could the results of inspections and other intelligence on businesses be shared between regulators? If so, might this allow regulators to better target interventions onto higher risk businesses, as advocated by the Department for Business Innovation and Skill’s Response to the Consultation on Transforming Regulatory Enforcement (December 2011)?
- If businesses are found to have similar approaches to complying with each area of regulation, would this allow regulators to share inspection results rather than independently assessing each area?
Four studies were completed in 2011 and 2012 to provide a robust base of evidence to inform decisions on how best to further develop assessment of businesses and data sharing between regulators. The key questions explored by these studies were:
- What evidence is there that businesses adopt a common approach to compliance across areas of regulation?
- To what extent is business compliance performance in one area of regulation indicative of the level of compliance that can be expected in other areas of regulation?
- To what extent would the sharing of risk rating and other data between regulators help target possible risk of a major failing on the part of the business?
The results were used to inform Better Regulation Delivery Office thinking on how best to support a simplified and transparent system of regulatory risk assessment.
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