If you were a tech startup thinking about operating in Europe before 2018, you would have been in for a really bad surprise if you failed to conduct due diligence on the possible regulatory risks of operating there.
That’s because the 2018 General Data Protection Regulation (GDPR) in the EU made it much harder for firms to collect, store, and analyze customer data. This put startups and small firms at a huge disadvantage against larger firms who had already been storing customer data for years. The new GDPR regulations added further difficulties to businesses needing to meet the required compliance, including companies in countries outside of the EU.
It’s just one example of how different layers of the government can pass regulations that can drastically impact your business. You can be caught unaware if you don’t first see it coming on the horizon. Not only will you end up incurring a lot of costs just to comply with any new regulations, but you could end up spending millions in legal fees just trying to stay on top of any mandated reporting (which is often open to wide interpretation).
To make things even more complicated, compliance in one country may violate regulatory laws in another, putting your company at risk even if you are doing your best to stay in compliance.
Anti-corruption laws such as the FCPA, and UKBA are also starting to crack down when it comes to making sure you do proper due diligence in preventing any involvement with corrupt parties. And changes to international trade policies may affect your export and import of goods.
So why put yourself at risk for increased costs of operations, legal and administrative hurdles and fees, or even a possible shutdown of your business when it can be prevented ahead of time? How do you avoid ending up in a regulatory crisis before it even occurs?
You can gain clarity and confidence to manage any upcoming regulatory changes by regularly assessing your risks in advance and designing the right Regulatory Risk Strategies. Rather than being tacked on at the end of a compliance program, due diligence investigations should be an essential part of your regulatory compliance efforts.