Limits of Inspections and Enforcement, Tools and Approaches to Promote Private Sector Compliance and Improve Safety and Outcomes Donald Macrae, WBG Consultant

Why have a regulatory system? A. Businesses are all bad and need to be disciplined! B. We have to find something for inspectors to do. C. Everyone has to have them. It’s like the weather. D. The government is trying to manage risks to the public that cannot be managed by individuals. E. I’ve no idea and I’ve never thought about it. (The answer is D.)

Risk Treatment Strategies for Supervisory Bodies Tolerate Share Mitigate Avoid | Robust enforcement of bans on products and activities | Risk-based inspection, based on High/ Medium/Low Risk objects | Compliance Management, Consumer Awareness and Information, Campaigning | Self-regulation by Industry, Voluntary Standards, or deferring risk treatment to a later stage, e.g. contingency planning.

Managing Public Risks Poor food management systemsContaminated foodDigestive disordersDeath So, improve food management systems in food businesses and deaths should be avoided. But will people respond as we intend? As an example, the risk of food-borne illness may be reduced through regulation in the following way -

“Responsive Regulation” CriminalOpportunistWilling to complyCompliant Different techniques are needed for different attitudes to compliance. But the aim is always to increase the level of compliance overall.

Decreasing deliberate non-compliance Unwilling to comply Willing to Comply Broadly Compliant Willing to Comply Broadly Compliant Unwilling to comply Catching bad guys doesn’t actually achieve much but is the traditional approach to enforcement.

Increasing compliance Unwilling to comply Willing to Comply Broadly Compliant Unwilling to comply Willing to Comply Broadly Compliant What is needed is to move those willing to comply into actual compliance.

Barriers to compliance ♦ Ignorance – don’t know what to do ♦ Capacity – unable to do it ♦ Compliance costs – can’t afford to do it ♦ Competitive advantage – my competitors aren’t doing it You need to engage with businesses to find out what stops them from complying and then see what you can do to remove the barriers. Often, the biggest barrier is just ignorance or confusion. Or you can be more scientific – there are various tools.

Behavioural Science Table of Eleven Aspects of spontaneous compliance: 1. knowledge of the regulation 2. cost / benefit ratio 3. degree of acceptance of the regulation 4. loyalty and obedience of the regulatee 5. informal monitoring Aspects of monitoring: 6. informal report probability 7. monitoring probability 8. detection probability 9. selectivity of the inspector Aspects of sanctions: 10. chance of sanctions 11. severity of sanctions

Elements of Compliance Management Regulations Clarity, feasibility and cost Tools and Resources How can they be applied? Products Actual technical compliance Behaviours Attitude to compliance Capacity to comply PeopleThings RulesTools Outcomes