Building Agile Regulatory “Muscles”

Technological advancements are undoubtedly a significant driver of these accelerating changes. Scholars traditionally expect regulators to adopt one of four main strategies in the face of innovation: blocking innovation; allowing innovation a “free pass;” applying old regulation; or generating new regulation. But when an innovative technology or business model is being developed, the regulator often does not have the ability to assess which of these four seemingly exhaustive responses is most suitable.

This is when a fifth approach is required, one that would enable regulators to test and learn in a more flexible and dynamic fashion. Agile regulation is that fifth way.

Agility—that is, the ability to respond to changes quickly and adaptively—is becoming a critical attribute of successful regulatory regimes. It is not enough to design the most precise regulation in a long, multi-stage process.