What Is the Difference between Regulatory Risk and Compliance Risk?

An organization’s compliance and regulatory risks result from rules and regulations that limit its operations and require it to pay specific fines or penalties to continue operating. Although both risks aim to improve organizational structure and guarantee sustainable operations, they differ in several aspects.

Regulatory risk concerns potential losses and damages resulting from legislative changes in your business, industry and market whereas compliance risk refers to the probability that your company would breach a law or regulation. Moreover, regulatory risk involves detecting changes and identifying risks in laws, regulations and agreements that govern your industry while compliance risk necessitates determining current or potential risks in your business units. Therefore, we recommend seeking professional advice to identify and prevent your potential regulatory and compliance risks.