ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business
A country's government replaces detailed prescriptive safety rules with a requirement that businesses must identify their own workplace risks and take reasonable steps to control them, with penalties for failure. Which approach to regulation is this?
This is principles-based regulation backed by legal enforcement. It sets a general duty to control risks reasonably and leaves businesses to decide how, with penalties for failure. Rules-based regulation would instead prescribe exact actions, and self-regulation would lack legal force.
- ASelf-regulation by an industry body with no legal backing
- BPrinciples-based regulation backed by legal enforcementCorrect
- CRules-based regulation specifying exact actions for each situation
Explanation
The law sets a general duty (reasonable steps to control risk) and leaves businesses to decide how, while penalties give legal force. Rules-based regulation would prescribe exact actions, and self-regulation would lack legal backing.
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