All inquiries carry with them some element of risk. There is no guarantee that the universe will conform to our predispositions.

Carl Sagan

Our services to independent regulators

Regulators are risk managers. Their aim is to ensure that regulated industries strike the right balance between different outcomes such as safety, service quality and efficiency. To this has been added the vital need to consider wider environmental implications and the need for sustainable development.

In order to achieve their aims, regulators need to establish monitoring arrangements and incentive regimes that encourage the right behaviours without stifling innovation. But this can be hard to get right. Failing to understand the businesses they regulate can result in undue emphasis being placed on one area – thereby increasing the risk of poor performance in another.

Risk Solutions’ ability to model complex problems, value different outcomes and understand the effects of uncertainty are particularly important in regulated industries. Central to our success is our ability to understand quickly the technical issues, contractual regimes and key risks to delivering desired outcomes. This enables us to focus our effort on the key issues and gain the confidence of all the parties concerned. Our approach is characterised by an inclusive and highly consultative approach designed to develop a consensus on the best way to achieve regulatory aims.

Examples of our work in this area include:

  • Identifying strategic risks to key regulatory objectives, and devising early warning indicators
  • Reviewing good practice in devising indicators and setting targets for performance improvement
  • Evaluating a complex suite of performance incentives and making recommendations to simplify the regime, strengthen it in key areas and address perverse incentives
  • Assessing the likely effect of a regulator’s determination on day-to-day decision making within a regulated company, and the possible impact on safety performance
  • Assessing the value for money of different regulatory options and identifying the most cost effective way of managing a key strategic risk.

In this area, more than any other, it is crucial that decisions are based on a thorough understanding of the issues and sound analysis. Large sums of public money are at stake and regulatory decisions have far-reaching implications for our economy and quality of life. Risk Solutions can help ensure that nothing is left to chance.