Chapter 12. Intelligent Regulatory Compliance

  1. Ron S. Kenett PhD, BSc Chairman CEO Research Professor Professor Associate Director Editor in Chief President4,5 and
  2. Yossi Raanan PhD, BSc Senior Consultant Strategic Partner Senior Lecturer former dean head chairman director6,7
  1. Marcus Spies PhD Senior Consultant Postdoctoral Fellow Professor Chair Scientific and Technical Director1,
  2. Rolf Gubser founding member Senior Consultant2 and
  3. Markus Schacher Senior Consultant specialist member3

Published Online: 19 AUG 2010

DOI: 10.1002/9780470972571.ch12

Operational Risk Management

Operational Risk Management

How to Cite

Spies, M., Gubser, R. and Schacher, M. (2010) Intelligent Regulatory Compliance, in Operational Risk Management (eds R. S. Kenett and Y. Raanan), John Wiley & Sons, Ltd, Chichester, UK. doi: 10.1002/9780470972571.ch12

Editor Information

  1. 4

    KPA Ltd, Raanana, Israel; University of Turin, Italy

  2. 5

    NYU-Poly, Center for Risk Engineering, New York, USA

  3. 6

    KPA Ltd, Raanana, Israel

  4. 7

    College of Management, Academic Studies, Rishon Lezion, Israel

Author Information

  1. 1

    Berlin Technical University, Germany

  2. 2

    NCR and Born Informatik AG, Switzerland

  3. 3

    KnowGravity Inc., Switzerland

Publication History

  1. Published Online: 19 AUG 2010
  2. Published Print: 22 OCT 2010

ISBN Information

Print ISBN: 9780470747483

Online ISBN: 9780470972571

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Keywords:

  • Intelligent Regulatory Compliance;
  • Object Management Group;
  • Basel II;
  • Business Motivation Model;
  • Semantics of Business Vocabularies and Business Rules

Summary

In view of the increasing needs for regulation of international markets many regulatory frameworks are being defined and enforced. However, the complexity of the regulation rules, frequent changes and differences in national legislations make it extremely complicated to implement, check or even prove regulatory compliance of company operations or processes in a large number of instances. In this context, the Basel II framework for capital adequacy (soon to evolve to Basel III) is currently being used for defining internal assessment processes in banks and other financial services providers. The chapter shows how recent standards and specifications related to business vocabularies and rules enable Intelligent Regulatory Compliance (IRC). By IRC, we mean semi-automatic or fully automated procedures that can check business operations of relevant complexity for compliance against a set of rules that express a regulatory standard. More specifically, the BMM (Business Motivation Model) and SBVR (Semantics of Business Vocabularies and business Rules) specifications by the Object Management Group (OMG) provide a formal basis for representing regulation systems in a sufficiently formal way to enable IRC of business processes. Besides the availability of automatic reasoning systems, IRC also requires semantics enabled analysis of business service and business performance data such as process execution logs or trace data. The MUSING project contributed several methods of analysis to the emerging field of IRC (MUSING, 2006). The chapter discusses standards and specifications for business governance and IRC based on BMM and SBVR.