CHAOS THEORY

New legislation is being introduced globally at a frantic rate. Now there is a new delivery system that provides relevant information in a fast, intelligent way. The result is improved collaboration, communication, and product stewardship.

Part of the problem is the lack of globally harmonized standards. Estimated at over $1.5 trillion a year, the global cost associated with complying with regulations is mountainous, and just keeping up with all the changes is time-consuming and complex. Each year brings its own avalanche of new regulations, codes of practice, and standards. The challenge increases exponentially for large multinationals making and marketing hundreds of high technology products around the world. Part of the problem is the lack of globally harmonized standards — regions, countries and trading blocs often have different and conflicting requirements. This is a rapidly shifting environment for the compliance teams whose job it is to keep up with the requirements — a job made almost impossible to achieve efficiently without suitable tools. “It’s so complex it’s like being asked to plough a field with a spoon,” said a sanguine delegate at a recent US conference.

Reconciling the moving targets of new product development and the volume of new requirements is proving difficult, leading to a situation where almost no companies are dealing with compliance in a world class way. According to data from the European Rapid Alert System (RAPEX), there was in increase of 32 percent in 2006 compared to 2005 for serious risk product notifications — largely due to products slipping through the compliance net. This retroactive approach to compliance adds costs, reduces profitability and has negative consequences for the reputation of affected companies.

The Woods From the Trees
An Irish company based in Cork has designed a Compliance Knowledge Management (CKM) System that captures relevant information in an intelligent manner, allowing companies to react faster and share information cross-functionally. Compliance & Risks Ltd (C&R) is led by charismatic Irishman Damien McGovern, whose leadership has produced C2P (Compliance-to-Product). C2P is a unique enterprise software and data service that transforms the way organizations manage risk, regulation and compliance, and it provides a strategic product stewardship solution.

“The way that legislative requirements are being produced around the world is chaotic,” believes McGovern, a trained barrister. “It’s a bit like walking into a library where all the books are jumbled up. You know the information you need is there but finding it is hugely time consuming. Compliance teams struggle to continuously improve in a way that benefits the organization strategically and operationally using current tools. Also, when work gets done it isn’t easily shared so the organization doesn’t benefit. Important decisions are being made with too few people in the organization understanding how or why that outcome was achieved.”

C2P uses a collaborative web-based system whereby a client’s server is continually updated with relevant information from C&R’s ‘hub’.The key to the C2P system is its ability to bridge the gulf between how new laws are produced and how they are implemented. The faster companies get a clear picture of the whole legislative environment the faster they can get compliant products to market without fear of expensive recalls. Therein lies the basis of compliance-derived competitive advantage. C2P uses a collaborative web-based system whereby a client’s server is continually updated with relevant information from C&R’s ‘hub’. The dedicated legal data team captures new and proposed legislation, ‘translates’ it into an easy-to-understand format and makes the data ‘intelligent’ using smart links. Users then take control and evaluate what individual response is required for each product. C2P also creates an audit trail of legislative changes and decision history that is useful to the organization and reassuring to regulators, auditors, and the boardroom.

C2P’s sophisticated database, which is the backbone of the system, covers the legislative world so that if a regulation changes in any policy area anywhere in the world it can be integrated into the system. The data is harmonized in a number of specialized templates and smart links connect key aspects of each law (policy area, scope, definitions and requirements) to internal specifications and individual products.

C2P is a sophisticated new model for managing compliance and risks. It contains a current knowledge base of 2,500 global laws, standards, and supporting sources that is growing daily. It covers the spectrum of environmental, compliance and product stewardship policy areas. Flexible and dynamic workflow applications have been incorporated around this structure to drive collaborative compliance processes.

“Despite the advantages of C2P, compliance will remain a task that continues to require understanding and support from top management,” says McGovern. But what it can offer is the ability to shine a light onto gray areas that are the source of untold trouble. It allows users to quickly and easily explore potentially relevant related sources, definitions, and comments otherwise the exclusive domain of expensive lawyers.

The system allows an organization not only to keep up with the deluge of new legislation but to transform the process into a source of competitive advantage. “We are dealing with a level of complexity where the devil is in the details,” believes McGovern. “But the angels are also in the details — if you can quickly and transparently knowledge manage what the nuanced details really mean for your products and services. This is where you have an advantage over competitors.”

With C2P much more time can be dedicated to the commercially valuable aspects of analysis, evaluation, communication and implementation.Currently, compliance officers report spending inordinate amounts of unproductive time searching for relevant information. But with C2P much more time can be dedicated to the commercially valuable aspects of analysis, evaluation, communication and implementation. This is key because the benefits of C2P are not restricted to compliance teams: design, legal, audit, engineering, product stewards, marketing and sales also have a need to know of impending regulatory changes that can impact the business. From the moment a law is first mooted, C2P will keep clients up to date, following developments through the adoption process until ultimately becoming law. “You can start thinking about a potential law’s impact from the earliest point,” says McGovern. “Most companies start thinking much too late.” The concept of web-based technology, integrated with up to the minute legal data, and supported by customized data services has caused quite a stir on both sides of the Atlantic. “Client feedback is overwhelmingly positive,” says McGovern. With regulatory costs soaring, the prospect of having a globally accessible Compliance Knowledge Management System is intuitively desirable. It will certainly not stop the tide of new regulations coming in — but it can help companies float above it.

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