Top Five Ways Regulation Can Introduce Operational Risk to Your Company

Top Five Ways Regulation Can Introduce Operational Risk to Your Company

Your suppliers are more than business entities that sell you parts or materials; they are the lifeline to the ongoing viability of your products. As such, it’s crucial to ensure that connection is a strong, healthy one — your products and business depend on it.

Regardless of your compliance landscape, there are several regulatory requirements associated with the sale of your products into global markets. Even if you aren’t in scope of some of them, they could impact your suppliers in a number of ways. This presents considerable operational risk to the ability to get your products to market successfully.

Through Assent’s work influencing and providing regulatory expertise to companies, we’ve found many ways in which operational risk can sneak into supply chains. This problem is exacerbated by a regulatory landscape that is always expanding, creating new ways for these issues to occur. And they can impact your bottom line as decisively as penalties issued by a regulatory body.

Here are five of the most common ways operational risk can have an impact on your products.

1. Ongoing Maintenance & Repair

Your products may require a range of chemical substances at different stages of the manufacturing process and in their ongoing maintenance. While those substances may not be regulated now, they could be in the future. Legislation such as the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation expand often, which could impact your ability to maintain and repair products down the line.

For example, the electronics industry has slowly been distancing itself from lead solder for many years, due to a range of environmental and health impacts. New substances used for soldering, such as tin, may cause shorts in some products due to their internal design. This can make it difficult to extend their life, as they require ongoing repair, or spare parts that are qualified with and reliant upon lead solder.

For more about how Assent can help your company keep clear of operational risk resulting from regulatory issues, download the Assent Compliance Platform Guide.

2. Unforeseen Disruptions Caused by Restrictions

If your company manufactures equipment to fill federal contracts, you might be exempt from substance regulations such as REACH and the Restriction of Hazardous Substances (RoHS) Directive. However, your suppliers may not benefit from the same exemptions. Rather, they must alter or discontinue product lines to navigate those regulations in order to sell products into your region, or other regulated countries where those parts are advanced into a secondary stage of manufacture. If a substance your product relies on is restricted, you may lose access to the parts that require the substance for production. This can lead to expensive product redesign and lost contracts.

3. A Supplier You Can No Longer Use

There are several ways your company can lose access to a supplier altogether. For example, when your company isn’t in scope of mandatory labor standards regulations, or if your suppliers are allowing poor or illegal work conditions to persist in their factories, it’s often just a matter of time before those issues are exposed. This can result in a loss of access to the supplier. Collecting data and performing audits in your supply chain will help you uncover these issues and influence remediation efforts before a major incident occurs.

4. Products Advanced to End-of-Life Prematurely

Losing access to parts that are crucial to the structural and operational integrity of your products can cause you to advance a product to end-of-life prematurely. For example, if your weapons systems require electronic products that are end-of-lifed due to RoHS restrictions placed on an upstream supplier, you may not be able to continue selling or maintaining the product. This would make it impossible to continue manufacturing the product, and repairing existing units when the part in question breaks down. With no other choice, your company would have to send the product to end-of-life and design an entirely new product line.

Assent’s regulatory experts can help your company identify operational risk in your supply chain. Click here to find out more.

5. Disruptions to Research & Development

If you don’t have a good understanding of which substances and materials used in your products could be restricted in the future, it could interfere with your ability to get new products approved for sale. For example, if your medical device company has created an innovative steel rod design, it will likely require a lengthy testing and approval process to be determined safe for use. If a substance or material used in the product’s manufacture later becomes restricted, you’ll have to redesign the product and go through the approval process again, which could set your product’s release back by up to two years.

Operational risk can impact your company in any number of ways, depending on your vertical, business size, how you procure supply and the areas you sell into. At Assent, we help our clients identify operational risk and find the most cost-efficient way forward, at a fraction of the cost of implementing an internal team of regulatory experts.

We also support our clients in addressing these challenges through our Premium Support service, executed by our team of world-class compliance professionals who work with some of the world’s most influential Fortune 500 companies.

Talk to Assent for more information about how your company can identify and manage operational risk resulting from regulatory non-compliance. Contact our experts at