The World Economic Forum, in collaboration with the Global Future Council on Agile Governance, has published a white paper on the importance of regulatory technology (RegTech), which utilizes technologies, such as cloud computing, big data and artificial intelligence, to meet regulatory compliance while automating parts of the process.
Orrick’s Paul Klimos and his coauthors describe the value RegTech can add – particularly in times of disruption, like recent events in the financial system and the global pandemic – as well as offer several RegTech case studies with General Motors, Suade Labs, the City of Novo Hamburgo, Brazil, the Government of Colombia and Xalgorithms.
The authors explain that “Emerging technologies have challenged governments’ ability to regulate the Fourth Industrial Revolution. On the one hand, there is a need to minimize or eliminate technological risk. On the other hand, there is a desire to optimize the potential benefits of new technologies.” They also point out that, “Regardless of the technologies adopted, regulation must not remain a static exercise on checking boxes. Gone is the deterministic approach to regulations where governments only ask what can go wrong and what are the consequences. Instead, a probabilistic, performance-based approach – entertaining the evolution of new economic or social scenarios, new technologies and new business models – is required to future-proof regulation and the technologies deployed.”