Regulatory Risk Research Articles

Development of Artificial Intelligence in Business Ethics and Regulatory Responsibilities in the Era of Artificial Intelligence

The purpose of this study is to analyze development of artificial intelligence in business ethics and regulatory responsibilities in the era of artificial intelligence. The research methods applied in this study are literature study, comparative regulatory analysis, regulatory analysis, and regulatory risk analysis. Through this research method, it is expected to provide a comprehensive picture of the regulatory framework, ethics, and responsibilities related to the development of artificial intelligence in a business context. The results of the study show that the implementation of a regulatory framework for the use of artificial intelligence in business faces a number of complex challenges, such as regulatory uncertainty, unclear regulatory obligations, data privacy and security, algorithmic bias, compliance with regulations and standards, ethical challenges in autonomous decisions, accountability in cases of failure, understanding by stakeholders, risks at the personal level, and changes in job and market dynamics. Keywords: Development, Artificial Intelligence, Business Ethics, Regulatory Responsibilities, Era of Artificial Intelligence

Environmental regulation, ESG, and firm value: evidence from China

ABSTRACT Companies are facing increasing environmental regulatory risk, but the literature has rarely studied how firms respond to this type of risk. This paper uses China’s Central Environmental Protection Inspection (CEPI) as an exogenous shock and explores the role of ESG engagement in mitigating the environmental regulatory risk. Our main findings are as follows. First, the CEPI reduces the market value of companies by 1.8%, or about $153,000 million. This implies that environmental regulation reduces firm value in the short run. Second, those with higher ESG scores suffer lower value degradation from the CEPI, implying that ESG plays the moderating role. Mechanism analyses suggest that ESG mitigates environmental regulatory risk by placating the government, but not by placating the public. This paper reveals a new role for ESG, i.e. buffering negative shocks from government environmental regulations. Meanwhile, our research provides helpful policy implications for governments and firms in developing countries to achieve sustainable development.

Chemical-Specific T Cell Tests Aim to Bridge a Gap in Skin Sensitization Evaluation

T cell activation is the final key event (KE4) in the adverse outcome pathway (AOP) of skin sensitization. However, validated new approach methodologies (NAMs) for evaluating this step are missing. Accordingly, chemicals that activate an unusually high frequency of T cells, as does the most prevalent metal allergen nickel, are not yet identified in a regulatory context. T cell reactivity to chemical sensitizers might be especially relevant in real-life scenarios, where skin injury, co-exposure to irritants in chemical mixtures, or infections may trigger the heterologous innate immune stimulation necessary to induce adaptive T cell responses. Additionally, cross-reactivity, which underlies cross-allergies, can only be assessed by T cell tests. To date, several experimental T cell tests are available that use primary naïve and memory CD4+ and CD8+ T cells from human blood. These include priming and lymphocyte proliferation tests and, most recently, activation-induced marker (AIM) assays. All approaches are challenged by chemical-mediated toxicity, inefficient or unknown generation of T cell epitopes, and a low throughput. Here, we summarize solutions and strategies to confirm in vitro T cell signals. Broader application and standardization are necessary to possibly define chemical applicability domains and to strengthen the role of T cell tests in regulatory risk assessment.

Navigating the legal uncertainty around the governance of an integrated energy system using the values of the energy transition and energy justice

AbstractIn order to realise the European Union's (EU) transition to clean and carbon‐neutral energy systems, various individual infrastructure systems and energy networks will have to coordinate and operate as an integrated energy system. Traditionally, these different infrastructure systems operate within their own sectors and are governed by separate legal regimes. The intersection of these different legal rules and interests creates regulatory uncertainty and risk for infrastructure operators and can dissuade operators from participating in system integration. This paper explores how infrastructure operators can overcome the legal uncertainty and regulatory risks of operating as an integrated system, whilst also ensuring that the policy objectives of the energy transition are realised. This paper argues that, by pursuing public values and energy justice principles, infrastructure operators will overcome the legal uncertainty surrounding system integration. By doing so, infrastructure operators will facilitate the realisation of an energy transition that is just, inclusive and in the public interest.

Teratogenic Risk Impact and Mitigation (TRIM): Study Protocol for the Development of a Decision Support Tool to Prioritize Medications for Risk Mitigation.

Preventing prenatal exposure to teratogenic medications is an important goal of regulatory risk mitigation efforts. In the USA, as of March 2024, 11 teratogenic medications have a required Risk Evaluation and Mitigation Strategy (REMS) program. It is unclear whether these programs target those medications with the most significant impact on public health and adverse pregnancy outcomes. This study aims to develop an innovative decision support tool that uses explicit, quantifiable criteria to facilitate prioritization of teratogenic medications for risk mitigation strategies. The Teratogenic Risk Impact and Mitigation (TRIM) decision support tool will be developed by a national panel via a modified Delphi approach to define measurable criteria, and a multi-criteria decision analysis to estimate criteria weights within a discrete choice experiment. The TRIM scores will then be calculated for 12 teratogenic drugs with active or eliminated REMS programs and for 12 teratogenic drugs without REMS. These drugs will be identified based on highest prenatal exposure prevalence in claims data of privately and publicly insured individuals. Data for the TRIM criteria levels for these 24 drugs will be identified from evidence searches and ad hoc analyses of the same claims data. Teratogenic Risk Impact and Mitigation is intended to inform regulatory decision making about the need for risk mitigation programs for teratogenic medications by providing explicit, quantifiable, evidence-based criteria. The TRIM scores of 24 teratogenic drugs may provide benchmarks for considering REMS for marketed and new teratogenic medications.

Dynamic analysis and application of network structure control in risk conduction in the industrial chain

According to control theory, a dynamical system is controllable if, with a suitable choice of inputs, it can be driven from any initial state to any desired final state within a finite time. Most dynamic characteristics of real networks are nonlinear, so achieving target control is more practical and necessary. The network’s control energy is also a problem that must be considered. Whether and how to control the complex system of the industrial chain has high theoretical and practical significance. In this study, we use the GARCH model, DCC model, and network structure control theory comprehensively to study the price fluctuation risk of the mining stock market from the perspective of the industry chain and network control dynamics and obtain interesting results. (1) Risk conduction among stocks has a prominent industry-driving effect, and the risk conduction ability of upper and middle stocks is stronger. (2) The risk regulation cost, time cost, and node number cost of the whole-industry chain are all higher than those of the two-tier chain, which indicates that the correlation complexity of the network has a positive relationship with risk control. (3) Key risk nodes play an essential role in risk control, so monitoring key stocks from the industrial chain perspective is necessary to control risks in time. This work can provide valuable suggestions for market regulators and policy-makers in terms of risk management and control.

Benchmark dose modeling for epidemiological dose-response assessment using case-control studies.

Following a previous article that focused on integrating epidemiological data from prospective cohort studies into toxicological risk assessment, this paper shifts the focus to case-control studies. Specifically, it utilizes the odds ratio (OR) as the main epidemiological measure, aligning it with the benchmark dose (BMD) methodology as the standard dose-response modeling approach to determine chemical toxicity values for regulatory risk assessment. A standardized BMD analysis framework has been established for toxicological data, including input data requirements, dose-response models, definitions of benchmark response, and consideration of model uncertainty. This framework has been enhanced by recent methods capable of handling both cohort and case-control studies using summary data that have been adjusted for confounders. The present study aims to investigate and compare the "effective count" based BMD modeling approach, merged with an algorithm used for converting odds ratio to relative risk in cohort studies with partial data information (i.e., the Wang algorithm), with the adjusted OR-based BMD analysis approach. The goal is to develop an adequate BMD modeling framework that can be generalized for analyzing published case-control study data. As in the previous study, these methods were applied to a database examining the association between bladder and lung cancer and inorganic arsenic exposure. The results indicate that estimated BMDs and BMDLs are relatively consistent across both methods. However, modeling adjusted OR values as continuous data for BMD estimation aligns better with established practices in toxicological BMD analysis, making it a more generalizable approach.

Information Technology Governance Using the COBIT 2019 Framework at PT Bank Pembangunan Daerah Papua

Effective and efficient information technology (IT) management is crucial for the banking industry, especially for PT Bank Pembangunan Daerah Papua (BPDP), which seeks to reinforce its role within the Papua region. Leveraging the COBIT 2019 framework, BPDP aims to enhance IT governance, addressing operational efficiency, information security, and regulatory compliance. This study highlights BPDP's strategic priorities, such as revenue growth, fostering innovation, and customer service excellence, which are essential for sustaining competitive advantage amidst regional geopolitical challenges. By identifying these key priorities, the research uncovers critical areas of improvement, including IT investment optimization, mitigation of regulatory and security risks, and solidifying IT's strategic role in driving business growth. To evaluate BPDP's IT governance maturity, this study applies COBIT 2019's ten design factors, from enterprise goals and risk profiles to IT-related issues, compliance needs, and technology adoption strategies. The findings underscore gaps in risk management, project lifecycle oversight, and resource allocation, offering actionable insights for governance improvement. Enhanced IT integration can support BPDP's larger objectives of sustainable growth and economic development within the region. Furthermore, the study demonstrates that a well-structured governance framework strengthens BPDP's operational efficiency, builds customer trust, and ensures alignment with regulatory standards and evolving technology landscapes. By adopting these governance recommendations, BPDP can achieve long-term success and secure its position as a prominent financial institution in Papua, thus reinforcing its commitment to regional economic growth and compliance with national regulatory standards.

Peer review of the pesticide risk assessment of the active substance fenoxaprop-P-ethyl.

The conclusions of the European Food Safety Authority (EFSA) following the peer review of the initial risk assessments carried out by the competent authorities of the rapporteur Member State Austria and co-rapporteur Member State Finland for the pesticide active substance fenoxaprop-P-ethyl are reported. The context of the peer review was that required by Commission Implementing Regulation (EU) No 844/2012, as amended by Commission Implementing Regulation (EU) No 2018/1659. The conclusions were reached on the basis of the evaluation of the representative uses of fenoxaprop-P-ethyl as a post-emergence herbicide in wheat, durum wheat, rye, triticale and barley to control annual monocotyledonous weeds. The reliable end points, appropriate for use in regulatory risk assessment, are presented. Missing information identified as being required by the regulatory framework is listed. Concerns are identified.

Debt maturity and climate change exposure: does life cycle moderate?

PurposeIn this study, I explore how climate exposure influences debt maturity and whether the life cycle moderates this relationship.Design/methodology/approachThis study employs robust panel fixed-effects regression models on 32,249 firm-year observations over 2002–2022. The meticulous examination of the relationship between climate exposure and debt maturity and the use of IV regression models to address endogeneity ensure the validity and reliability of the findings. Exploiting an external shock to validate the results further enhances the robustness of the analysis.FindingsThe study reveals that climate change exposure significantly negatively affects debt maturity, a finding that holds for both climate-related opportunities and regulatory risks. While the life cycle impacts debt maturity, it exacerbates the negative effect for firms in the introductory and growth phases. This exacerbation is due to underinvestment problems and a lack of financial flexibility. These findings shed new light on the relationship between climate exposure and debt maturity, providing valuable insights for corporate finance professionals and strategic managers.Practical implicationsThe evidence presented in this study has strategic implications for corporate managers, investors, academia and other stakeholders. The insights on the choice or substitution of debt maturity during certain life cycle phases can provide valuable guidance to management, empowering them to make informed decisions.Originality/valueThe dynamic role of the corporate life cycle in the relationship between capital structure and climate exposure is a novel area of research. This paper significantly contributes to our understanding of the combined relationship of firm life cycle and climate exposure on debt maturity, offering a fresh perspective on an underexplored topic. This study’s unique approach and original findings will pique the interest of academic researchers and corporate finance professionals alike.

Evaluating the performance of multi-omics integration: a thyroid toxicity case study.

Multi-omics data integration has been repeatedly discussed as the way forward to more comprehensively cover the molecular responses of cells or organisms to chemical exposure in systems toxicology and regulatory risk assessment. In Canzler etal. (Arch Toxicol 94(2):371-388. https://doi.org/10.1007/s00204-020-02656-y ), we reviewed the state of the art in applying multi-omics approaches in toxicological research and chemical risk assessment. We developed best practices for the experimental design of multi-omics studies, omics data acquisition, and subsequent omics data integration. We found that multi-omics data sets for toxicological research questions were generally rare, with no datasets comprising more than two omics layers adhering to these best practices. Due to these limitations, we could not fully assess the benefits of different data integration approaches or quantitatively evaluate the contribution of various omics layers for toxicological research questions. Here, we report on a multi-omics study on thyroid toxicity that we conducted in compliance with these best practices. We induced direct and indirect thyroid toxicity through Propylthiouracil (PTU) and Phenytoin, respectively, in a 28-day plus 14-day recovery oral rat toxicity study. We collected clinical and histopathological data and six omics layers, including the long and short transcriptome, proteome, phosphoproteome, and metabolome from plasma, thyroid, and liver. We demonstrate that the multi-omics approach is superior to single-omics in detecting responses at the regulatory pathway level. We also show how combining omics data with clinical and histopathological parameters facilitates the interpretation of the data. Furthermore, we illustrate how multi-omics integration can hint at the involvement of non-coding RNAs in post-transcriptional regulation. Also, we show that multi-omics facilitates grouping, and we assess how much information individual and combinations of omics layers contribute to this approach.

Resource Planning and Collapse of Buildings in Kiambu County, Kenya

Purpose: The research sought to find out the impacts of resource planning on building collapse in Kiambu County, Kenya. Therefore, this research aimed to establish the impact of resource planning on building collapse in Kiambu to be able to advise on how to contain the problem and enhance the non-collapse of such buildings. Methodology: In this study, the authors adopted a simple random sampling technique to identify construction projects in Kiambu County based on Kahneman and Tversky’s Scheduling Fallacy Theory that covers problems such as over-optimism and false resource forecasting on resource requirement necessary for efficient completion of the project. The descriptive research method was also used in the study since it included both qualitative and quantitative data. The population of the study consisted of 545, which included the employees from the physical planning department, architects, surveyors, engineers, and contractors’ builders, and finally the sample size came to 231 as estimated By Yamane, 1967. Findings: The research findings revealed that poor resource management has partly influenced building failures. Attempts by the contractors to solve the problem and eradicate the vice have been frustrated by the locals and politicians for their selfish reasons which have not been highlighted in this study. The research also pointed out that handling of resources reveals the highest mean score of 4.1773 this means that most respondents hold positive attitudes towards their practice of resource planning. Unique Contribution to Theory, Policy, and Practice: The Scheduling Fallacy Theory of 1979 by Kahneman and Tversky was utilized to examine the construction collapses of Kiambu County and the cognitive biases of underestimating time, resources, and costs in construction projects. The study suggested that strict adherence to building codes, better regulatory standards, risk evaluation, and better resource allocation are needed. Prevention was recommended through cross-sector collaboration of government, developers, contractors, and regulatory bodies alike. Empirical research into resource planning faults and their impact on structural integrity was proposed.

Influence of External Stakeholder Involvement and Risk Perception on Affordable Housing: A Survey on the Implementation of Affordable Housing Project in Anderson-Ofafa Estate, Kisumu City (Kenya)

The significance of stakeholder involvement and risk forecasting in project management has been documented in literature and in studies all over the World. One such study was carried out in Anderson-Ofafa estate, Kisumu City. The main goal of the study was to assess the influence of external stakeholder involvement and risk perception on the implementation of the project. The stakeholders showed resistance to the housing project.The study aimed to establish the risks the project is exposed to based on stakeholder attitude and their influence on project performance, and whether the stakeholders were involved so as to provide solutions to problems bedeviling the project and to generate new knowledge. A survey of general respondents/ intelligent laypersons of age 18 years and above totaling 384 and key informants numbering 16 proportionately sampled from a population of 174,145 people found out that there was a significant correlation between stakeholder involvement, risk perception and project performance. In addition, the study established the occurrence of socio-political,regulatory and financial risk factors which had a perceived high influence of 50% and above, moderate influence of 39% and a very high influence of above 50% respectively.Updated risk register had a perceived high influence of 50% and above. Socio-political risk factors significantly influenced the project performance as was hypothesized by the alternative hypothesis of this study.Financial risk factors had the greatest impact.The stakeholders were involved in the project but were still not satisfied with its implementation.The results are expected to assist the project stakeholders align their goals with that of the project to foster sustainability.The practical or managerial implications is explained as follows- there are documented potential consequences and outcomes of stakeholder actions that have contributed to risk factors that will have extended effect on all stakeholders; including project beneficiaries, project providers, project influencers, and the project governance team. Interventions recommended include; Project sponsors to focus on strategies that manages risk perception and returns expectations, Project manager to reduce project scope, public sector to put measures that guarantee stability in laws and regulations and, the project should be infused into the new affordable housing program by the Kenya Kwanza government to benefit from the new government initiated housing levy fund.

Impact of digital transformation on financial stability in emerging markets: evidence from Ethiopia

This insightful study delves into the intricate relationship between key digital finance adoption indicators and the stability of the banking sector in Ethiopia, an emerging economy undergoing rapid digitalization. Covering annual data from 1991 to 2022 and utilizing an autoregressive distributed lag (ARDL) approach alongside Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) techniques, the researchers uncover thought-provoking findings that challenge conventional wisdom. Contrary to expectations of a positive long-term association, the analysis reveals a statistically significant negative relationship between both internet usage and mobile phone subscriptions and Ethiopia's banking system's financial stability. This robust result, validated through rigorous robustness checks, suggests that the breakneck pace of digital transformation may outpace the development of robust regulatory frameworks and risk management practices, ultimately undermining the overall stability of the financial sector. Interestingly, the short-term analysis presents a more nuanced picture, with mobile phone subscriptions exhibiting a stabilizing effect in the immediate aftermath. This intriguing dichotomy highlights the complex and evolving dynamics at play, where the challenges of integrating digital finance with the traditional banking infrastructure and the persistence of informal financial activities potentially offset the benefits of enhanced financial inclusion and transaction efficiency. These thought-provoking findings carry crucial implications for policymakers and industry stakeholders navigating the digital revolution. Policy implications emphasize the need for robust regulatory frameworks, enhanced cyber security measures, and improved financial literacy. The findings underscore the importance of a nuanced approach to digital finance in emerging economies, advocating for continuous adaptation of policies to address the evolving landscape of financial technology. Continued inquiry can better guide policies that foster digital transformation while safeguarding stability, especially in rapidly developing regions like sub-Saharan Africa.Graphical

Global spillovers of US climate policy risk: Evidence from EU carbon emissions futures

International climate policy risk spillovers occur when expected changes to climate policy stringency in one country affect expected climate policy stringency in another country. We develop an event study procedure to identify such spillovers in emissions trading systems, specifically examining the impact from the United States (US) to the European Union (EU). Distinguishing between policy events likely to reduce US commitment to climate action (‘brown events’) and those likely to increase it (‘green events’), we find that the average brown US policy event is associated with an anticipated increase in future EU carbon permit supply, leading to a cumulative 7.1% drop in EU carbon prices over the event window. Conversely, green US policy events are linked to an expected decrease in future EU permit supply, resulting in a cumulative 4.7% rise in EU carbon prices. These findings suggest that financial markets anticipate EU regulators to align with the direction of US climate policy. Our results underscore the significance of regulatory risk spillovers in global climate policy coordination.

Pharmaceutical industry promotional activities on social media: a scoping review

Abstract Objectives The rise of social media has broadened the reach and impact of pharmaceutical promotion across countries. This scoping review synthesizes available literature on the nature, extent, and impacts of such promotion, with a particular focus on public health implications. Methods Using a systematic strategy, we searched six multidisciplinary scholarly databases for empirical studies, both peer-reviewed and grey, published since 2004, which had collected data on pharmaceutical promotion via social media. Data were synthesized qualitatively into outcome domains. Key findings We included 45 studies, primarily conducted in the USA (20/45, 44%) and multi-nationally (15/45, 33%), and published after 2013 (40/45, 89%). Studies used content analyses, surveys, and interviews to measure pharmaceutical industry presence or impacts on the following indicators: social media, social media strategy, consumer reach and engagement, health information quality, ethical and regulatory guideline adherence, and consumer attitudes and behaviours. Taken together, these studies indicate a gradual increase in industry use of social media, notably including the development of novel consumer engagement strategies, such as targeted promotion and influencer sponsorship. Studies also showed that, in some cases, health information provided on social media is of low quality, ethically and legally questionable, and potentially harmful to public health. Conclusions Appreciating the regulatory and reputational risks of consumer engagement on social media, the pharmaceutical industry has gradually increased promotional activities on social media since its inception. Evidence of harmful content and promotional activities that have become more covert and targeted suggests the need for regulatory development.

How Readable Is the Information the United Kingdom's Statutory Health and Social Care Professional Regulators Provide for the Public to Engage With Fitness to Practise Processes?

The public are an important source of notifications and evidence for the investigation of concerns by regulators of professionals. The website is an important source of information for the public, but the complexity of information presented to engage with the public is unknown. This study explored the readability of information provided for the public to engage with fitness to practise processes by examining the websites of the 13 UK statutory health and social care professional regulators. Six readability algorithms were utilised to calculate the readability scores of 180 general and 8 easy-read documents published for the 15 sites of the United Kingdom's 13 health and social care statutory professional regulatory bodies. These tests were the Flesch Kincaid Reading Ease, the Flesch Kincaid Grade Level, the Gunning Fog Score, the Simple Measure of Gobbledygook (SMOG) Index, the Coleman Liau Index and the Automated Readability Index (ARI). All the fitness to practise documents analysed in this study are written at a level too difficult for most of the general population to read, except one easy-read document. There was also considerable variation in readability across resources for the same regulator, which could be confusing. Regulatory bodies risk excluding a large proportion of UK adults who may want to engage with professional regulatory proceedings. This is the first comparative analysis of readability conducted independent of the regulators of the fitness to practise website documents of health and social care regulators. The public are a key source of evidence in regulatory proceedings. Regulators could improve public engagement by addressing the complexity of language used. Our advisory group of people with lived experience of involvement as members of the public in fitness to practise proceedings discussed the findings and contributed to the recommendations.

Peer review of the pesticide risk assessment of the active substance elemental iron.

The conclusions of the European Food Safety Authority (EFSA) following the peer review of the initial risk assessments carried out by the competent authority of the rapporteur Member State Austria for the pesticide active substance elemental iron and the considerations as regards the inclusion of the substance in Annex IV of Regulation (EC) No 396/2005 are reported. The context of the peer review was that required by Regulation (EC) No 1107/2009 of the European Parliament and of the Council. The conclusions were reached on the basis of the evaluation of the representative uses of elemental iron in field and greenhouses (permanent and non-permanent structures) via granule application by spreading on all edible and non-edible crops, ornamental plants and amenity grassland to control molluscs. The reliable endpoints, appropriate for use in regulatory risk assessment, are presented. Missing information identified as being required by the regulatory framework is listed.

Peer review of the pesticide risk assessment of the active substance bixlozone.

The conclusions of the European Food Safety Authority (EFSA) following the peer review of the initial risk assessments carried out by the competent authority of the rapporteur Member State, The Netherlands for the pesticide active substance bixlozone are reported. The context of the peer review was that required by Regulation (EC) No 1107/2009 of the European Parliament and of the Council. The conclusions were reached on the basis of the evaluation of the representative uses of bixlozone as an herbicide on winter cereals (wheat and barley), winter oilseed rape and maize via soil broadcast spray application in field. The reliable endpoints, appropriate for use in regulatory risk assessment are presented. Missing information identified as being required by the regulatory framework is listed. Concerns are identified.

Peer review of the pesticide risk assessment of the active substance pirimicarb.

The conclusions of the European Food Safety Authority (EFSA) following the peer review of the initial risk assessments carried out by the competent authorities of the rapporteur Member State Sweden for the pesticide active substance pirimicarb are reported. The context of the peer review was that required by Commission Implementing Regulation (EU) No 844/2012, as amended by Commission Implementing Regulation (EU) No 2018/1659. The conclusions were reached on the basis of the evaluation of the representative use(s) of pirimicarb as an insecticide on winter and spring wheat and sugar beet via foliar spray application and on ornamental pot plants in permanent greenhouses. The reliable end points, appropriate for use in regulatory risk assessment are presented. Missing information identified as being required by the regulatory framework is listed. Concerns are identified.