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A Framework to Measure Corporate Regulatory Exposure

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Enterprise Applications, Markets and Services in the Finance Industry (FinanceCom 2022)

Part of the book series: Lecture Notes in Business Information Processing ((LNBIP,volume 467))

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Abstract

The amendment of existing and the passing of new regulations keep the corpus of regulation changing and growing dynamically. Against this background, companies face increasing costs to comply with existing and upcoming regulation. However, the high amount of regulatory texts makes it difficult for companies to identify which regulations apply to them. While regulatory technology, so-called RegTech, enables companies to comply with regulatory requirements or serves supervisory authorities to check compliance, there are no tools that enable companies to efficiently determine the relevance of a regulation in an automated manner. Therefore, this paper develops a decision support framework that makes use of techniques from natural language processing. We apply our approach to the Code of Federal Regulations in the U.S and discuss the results. As a key practical implication, our framework enables companies to retrieve regulations that speak to their business activities and may require compliance actions.

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Notes

  1. 1.

    We use the sense2vec model: https://github.com/explosion/sense2vec#pretrained-vectors.

  2. 2.

    The historical versions of the U.S. Code of Federal Regulation provided in the XML format are available at: https://www.govinfo.gov/bulkdata/CFR.

  3. 3.

    The quarterly index files for electronic retrieval system for SEC filings (EDGAR) are available at: https://www.sec.gov/Archives/edgar/full-index/.

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Acknowledgments

We thank the “efl – the Data Science Institute” located in Frankfurt am Main, Germany, for funding our project.

Author information

Authors and Affiliations

  1. University of Siegen, Siegen, Germany

    Jascha-Alexander Koch

  2. Goethe University Frankfurt, Frankfurt am Main, Germany

    Peter Gomber

Authors
  1. Jascha-Alexander Koch
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  2. Peter Gomber
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Corresponding author

Correspondence to Jascha-Alexander Koch .

Editor information

Editors and Affiliations

  1. University of Twente and JADS, Enschede, The Netherlands

    Jos van Hillegersberg

  2. University of Twente, Enschede, The Netherlands

    Jörg Osterrieder

  3. University of New South Wales, Sydney, NSW, Australia

    Fethi Rabhi

  4. University of Twente, Enschede, The Netherlands

    Abhishta Abhishta

  5. University of Twente, Enschede, The Netherlands

    Vijay Marisetty

  6. University of Twente, Enschede, The Netherlands

    Xiaohong Huang

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Koch, JA., Gomber, P. (2023). A Framework to Measure Corporate Regulatory Exposure. In: van Hillegersberg, J., Osterrieder, J., Rabhi, F., Abhishta, A., Marisetty, V., Huang, X. (eds) Enterprise Applications, Markets and Services in the Finance Industry. FinanceCom 2022. Lecture Notes in Business Information Processing, vol 467. Springer, Cham. https://doi.org/10.1007/978-3-031-31671-5_3

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  • DOI: https://doi.org/10.1007/978-3-031-31671-5_3

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-031-31670-8

  • Online ISBN: 978-3-031-31671-5

  • eBook Packages: Computer ScienceComputer Science (R0)

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