Regulatory Risk Management & Your Entity's Global Footprint

The return to economic growth that's occurred over the last year has led to a new round of expansion by multinational enterprises and institutions. However, this expansion is also taking place in what is, in some ways, a radically changed political context, with widespread popular alienation from the center and the ensuing rise of populist parties on both the right and left in the developed world.

An organization that has a global reach has access to unique opportunities for profit that are closed off to those that are walled off by national borders. However, this global opportunity also comes with global exposure to both the requirements of regulatory authorities within national governments and the higher levels of regional economic cooperation like EU law and free-trade agreements, eventually making the entity and its leadership responsible for following the law in different competing jurisdictions.

Saying this might seem banal and obvious, but there are good reasons why every multinational enterprise needs to think of its business in an interlinked manner. For instance, new regulations on one legal entity in a given country can have effects that roll onto other entities that are linked to it internationally. Furthermore, government inquiries into business no longer stop at the boundaries of that particular state, if they ever did. Barclays and other British financial institutions accused of market manipulation were reminded of this in 2012 when they were fined millions by the Federal Trade Commission (FTC) for malfeasance allegedly committed at Barclays' home base in London.

A corporation originally chartered in the UK might operate by long-term custom in Ireland, the rest of the EU and the US. With growing political uncertainty in each of these countries spilling over into the international arena, it's imperative that every multinational organization be regulatory-ready. The way this is done is called regulatory risk management, and this post is meant to provide some basic pointers.

Develop a Sense of the Regulatory Environment

Although lobbying governments in favor of beneficial policy and against policies that will place negative restraints on an enterprise is a well-known and enormously lucrative profession, an effective lobbying strategy is only the final outcome of many, more basic practices that make your leadership aware of the environment, and your ability to influence it.

Sensing the variety of regulatory environments a multinational entity operates within involves the continual monitoring of legislation and policy. This allows an organization to identify potential risks and opportunities for the larger organization and is a basic responsibility of not only legal departments but the board and senior management.

Smaller enterprises, or those that have recently grown but want to have more of an influence on policy, first need a basic awareness of the regulatory environment into which they've come. For example, even without a lobbying strategy or division, sensing operations that can monitor lobbying disclosures by competitors may give your organization a sense of what the current strategic issues are.

Building a Government Relations Strategy

Whatever the size of the entity in question, relations with regulatory authorities are essential, although they operate at very different scales and with different methods. One good example of this is investment management. While most large funds organize an in-house team to handle government and regulatory relations, small or midsize funds may combine the expertise of their own regulatory liaison with the services of a virtual external support team and membership in trade associations.

The kind of government relations strategy your entity develops will depend not only on its size but on the needs of its different operations and overall growth strategy. Plotting a course past the shoals of investigation and penalties by regulators depends on accurate sensing and the mobilization of both internal and external resources to secure and influence policy.

Technology, Data and Analytics

Electronic access to pending legislation has been available from most democratic and accountable governments for quite a while now, and since that point, analysts have developed increasingly sophisticated ways to grab data, compare it to other sets and deliver reports.

While it is certain that all entities should embrace the latest technologies, especially methods of data collection and analysis in its strategy to sense and then influence the policy environment, how it does this will again depend on your entity's specific size and needs. To return to investment management, large firms may find the need to combine their own legislative analysis with supplemental data collection through outsourcing, while many smaller ones will benefit from the cost-efficiency of contracting out all of their policy data and analytics to organizations with this specific expertise.


From the germ of a sensing operation within a small firm to the high-powered lobbyists operating in Washington, D.C., influencing government policy in an opportunity-enhancing manner is one of the most murky and thorny aspects of ensuring your organization's success. Blueprint OneWorld has a number of elegant and effective software solutions that will assist you in building or revamping your government relations strategy.

Through our ChartIt solution, for example, you can get efficient automated production of charts and diagrams based on certifiable and historically accurate information on regulation that allows leadership teams to operationalize the different kinds of perspective a given chart tells them through 'what-if' scenarios. These scenarios represent the effects of different kinds of reorganizations and restructurings on their entities. Please call or email us to discuss this and our other solutions today.