Definition
Regulatory Risk is the possibility of adverse consequences arising from regulatory change, new supervisory requirements or failure to comply with applicable Regulation.
Human Explanation
An organisation may face difficulty because requirements change or because its activities do not meet current obligations.
Why it Matters
Monitoring the regulatory environment gives the organisation time to assess impact and prepare proportionate changes.
Conceptual Boundary
Regulatory Risk focuses on regulation and supervisory expectations. It is related to, but narrower than, Legal Risk.
Practical Perspective
Assign ownership for monitoring relevant change, assessing applicability and translating it into operational action.