Using Risk Analysis as the Foundation for Regulatory Delivery: Principles, Methods and Challenges

Good regulation is:...choosing the right methods to move from risk to outcomes Risks Outcomes Interventions Demand Regulated Information Policies and priority setting Education Regulation and advice Influence and feedback

Why use risk based approaches? Efficient and effective use of state resources Target resources on the criminal, the careless and the incompetent Reduce burdens on compliant businesses Transparency for business to drive its own environment Big(ger) data for a big(ger) society

How can you compare risks? There are two sort of iceberg -

Risk as the currency of regulation The ability to prioritise between risks

a)Strategic Risk – recognising drivers from policy and statute b)Prioritisation – synthesising national and local c)Operational Risk Assessment – selecting optimum intervention approaches d)Risk Based Targeting – maximising the value of inspection e)Sanctioning by Risk – ensuring a proportionate response When to use risk based regulation

A) Strategic Risk ‘We recommend that each department and agency with responsibility for regulation should...identify the principal risks they are protecting against and what short and longer-term outcomes their interventions are designed to achieve’ – Better Regulation Commission The duty to have regard to the desirability of promoting economic growth (the “growth duty”) is accompanied by a power enabling the Secretary of State to issue statutory guidance to those exercising non-economic regulatory functions (“regulators”) as to how the duty may be discharged. The Deregulation Bill provides that those who are subject to the growth duty must have regard to the guidance when carrying out their regulatory functions. –Growth Duty

Evidence Based Perception v Reality Regional Strategic Analysis Strategy Delivery Local priorities National Threats Intelliegnce Assessment National Regulators’ strategies Central Government direction Local priorities National Threats Intelliegnce Assessment National Regulators’ strategies Central Government direction National priorities Socio-demographic Environment Tradition/culture Local democracy Place shaping National priorities Socio-demographic Environment Tradition/culture Local democracy Place shaping B) Prioritisation

C) Operational Risk Assessment Demand Regulated Information Policies and priority setting Education Regulation and advice Influence and feedback

D)Risk Based Targeting Higher Specialist Intervention Compliance Audit Random Intervention & Self Assessment Intervention Strategy Higher Lower Premise Risk Risk: hazard x likelihood

E) Sanctioning by risk

Excess sanctions over penalisation No sanctions under penalisation Inadequate sanctions under penalisation Proportionate sanctions Non proportionate sanctions ‘single disposal’ Severity of offence Penalty E.G. Fixed penalty notice for speeding Driving Ban £ points 30 mph 33 mph40 mph 100 mph E) Sanctioning by risk