GE Citizenship

Regulatory Excellence

As we reported in the 2007-2008 Citizenship Report, the fast-changing global marketplace has become more challenging than ever for both corporations and the regulators that oversee them. At that time, we identified an emerging trend toward intensifying regulatory oversight and enforcement in response to many factors, including the corporate scandals of recent years.

Since that report, the historic recessionary environment has only served to accelerate and intensify the trend toward increased and tougher regulation. Trust in big business and corporations around the globe are at an all-time low. New financial scandals and the sudden evaporation of personal wealth and job security have sparked unparalleled anger and frustration. Legislators and regulators are responding with unprecedented oversight and enforcement to protect their constituents and the integrity of economic systems. Today, more than ever, regulators are ready, willing and able to act swiftly and dramatically on key issues to effect rapid change across virtually every sector of industry.

This environment demands a reexamination of compliance systems and processes to assure that risks are being anticipated and managed as effectively as needed. GE’s response to this trend began in 2007, when we embarked upon a company-wide initiative termed “Regulatory Excellence.” The initiative is designed to strengthen GE’s regulatory processes while emphasizing the special role of business leaders in regulatory compliance.

The initiative also established a process-based approach to managing regulatory risk areas across the company. The six essential processes are:

• Lead: Business and function leaders are engaged in establishing regulatory issues as a business priority, and personally participate in managing regulatory risks.
• Assess: The detailed regulatory requirements that affect business operations globally are inventoried and gaps are identified.
• Resource: Domain experts are in place for all critical risk areas.
• Anticipate: A process is in place that provides early warnings on new regulations and emerging trends.
• Relate: Relationships are proactively maintained with regulators at all levels.
• Control: Execution is monitored through metrics, audits, inspections and other means.

Following its launch in 2007, Regulatory Excellence has been designated as a company-wide compliance priority for both 2008 and 2009. Throughout 2008, regulatory and compliance leaders worked in their businesses to implement the regulatory processes in their most significant risk areas. Results were tracked through scorecards and reported to GE’s Policy Compliance Review Board. In addition, the first company-wide Early Warning System Report was developed. In 2009, the initiative will continue with a focus on optimizing controls as well as regulatory excellence in emerging market locations.