Why regulation should be seen as an enabler of innovation

From artificial intelligence (AI) to green energy, from automated vehicles to the Internet of Things (IoT), innovation is accelerating at an inexorable pace, creating enormous opportunities for businesses and consumers, but also new threats.

Regulators are racing to respond and over the last few years a number of regulations and standards have been introduced to ensure that products and services are brought to market safely.

This has made the compliance task much more difficult for innovators, especially those operating globally who must navigate different regulatory frameworks in each international market. However, it would be a mistake to view regulation primarily as a burden, as some companies do, when in fact it plays a key role in driving innovation.

Technology that does not meet regulatory requirements will not succeed, and for good reason, which means that the companies behind it will suffer losses along with society as a whole.

To ensure this doesn’t happen, companies need to embrace regulation as part of the invention process rather than treating it as a barrier. This is where the testing, inspection and certification (TIC) industry comes in, helping organizations detect possible regulatory and financial risks, ultimately ensuring fewer barriers to exciting new solutions.

“The TIC sector is a key foundation for secure inventions,” says Stan Zurkiewicz, CEO of Dekra, one of the world’s leading TIC providers. “When breakthrough innovations emerge in the world, ensuring their safety is non-negotiable. If an innovator does not take this into account, he will surely fail.

AI threats and opportunities

Dekra conducts product tests, inspections and certifications in 60 countries, serving approximately 500,000 business customers from various industries, as well as millions of individual consumers.

One of the company’s key areas of focus is artificial intelligence, which, if properly implemented, can provide enormous benefits to consumers, including safer and cleaner transportation, more efficient production, cheaper and more sustainable energy, as well as better and more accessible healthcare.

When a breakthrough innovation
comes into the world providing
it’s safe, it’s non-negotiable

However, concerns about the risk of bias and inaccuracy of algorithms and data have led to greater regulatory scrutiny and the introduction of stringent new regulations. The European Union (EU) is leading the way with its Artificial Intelligence Act, which will closely monitor certain types of AI to ensure they are safe, transparent, traceable, non-discriminatory and environmentally friendly.

To support its customers, Dekra independently assesses, tests and certifies AI systems to ensure they meet the new rules.

“If something goes wrong with artificial intelligence, the consequences can be quite serious and difficult to reverse,” says Zurkiewicz. “The challenge, therefore, is to ensure that the positive vision of AI prevails, rather than the negative one, which is why it is so important to have a trusted TIC partner.”

Cyber ​​and sustainability

Dekra also plays an important role in the rapidly evolving world of cybersecurity. As the Internet touches more and more aspects of everyday life, hackers are finding new opportunities to exploit it at the device level.

Everything from connected vehicles and internet-connected electrical devices to power plants and other critical infrastructure is now a target, which is why thorough testing and inspections are so important.

The same is true in the sustainability sector, where wind turbines, solar panels and batteries also require compliance assessments and periodic inspections for safety, durability and effectiveness.

Additionally, companies face increasing pressure from regulators and shareholders to demonstrate that they are actually making progress towards meeting carbon reduction targets. “This requires a financial but also a technical audit, which we can help with,” says Zurkiewicz. “Sustainable claims can no longer be made against investors or regulators without credible independent verification.”

Stuttgart-based Dekra reported revenues of €4.1 billion (£3.5 billion) last year, making it the fourth-largest TIC organization in the world. It supports a wide range of organizations, including public sector agencies and government departments, start-ups and SMEs, as well as major giants such as BMW, Apple and Google.

Among other services, Dekra tests and certifies products for export worldwide, provides regulatory guidance to companies and is a leading testing provider for the electric vehicle sector. It also provides retail and business customers with mandatory and voluntary periodic vehicle inspections of all types of vehicles.

Risk management

While larger companies are better equipped to manage regulatory changes, it poses a challenge for all companies, Zurkiewicz says. “Even if there is no obligation to undergo mandatory third-party inspections, companies come to Dekra to help them stay ahead of the competition,” he says. “This is a key part of risk management.”

Last year, Dekra partnered with LatticeFlow to complete the first commercial AI evaluation for Migros Bank, one of Switzerland’s best-known financial institutions with approximately 1 million customers nationwide.

The audit concerned the bank’s partnership with Gowago, the largest Swiss provider of online car leasing, for which Migros provided financial services.

Gowago uses an artificial intelligence model to predict the value of cars at the end of the lease term to provide competitive rates. However, algorithm errors could have significantly impacted Migros’ revenues, so the model had to be thoroughly tested.

“Our Dekra AI Assessment auditors used the Framework, which focuses on assessing the quality of the AI ​​system, as well as its compliance with upcoming EU regulations,” says Zurkiewicz.

“In addition, LatticeFlow conducted a comprehensive technical assessment of the Gowago AI lifecycle to ensure security and trustworthiness in line with the latest ISO standards.

“Overall, we helped Migros leverage the benefits of AI in banking operations by managing risk.”

“One-stop shop”

Dekra also supports Hylane, a German government-backed start-up that operates Europe’s largest fleet of hydrogen-powered trucks.

The company rents its trucks to large transport companies such as DB Schenker and GLS, as well as to retailers such as DM and Rewe. And although users only pay for the kilometers traveled, they are still entitled to maintenance, repairs, servicing, insurance and access to hydrogen as part of the package.

Dekra helps Hylane with driver testing and training, statutory vehicle inspections and condition reporting. “Dekra is a strategic partner because our organization is a one-stop shop for everything Hylane needs,” said Stan Zurkiewicz.

Innovation will accelerate rapidly over the coming decade and a large number of new regulations will be necessary, especially for companies operating across borders.

Testing, inspection and certification will play a key role in helping companies on this journey, and in many cases will be required by law.

“Regulation should not be seen as a burden, but as a necessary enabler of innovation,” says Zurkiewicz. “To be commercially successful, companies must follow the rules, and rigorous independent testing, inspection and certification is key to helping them do this.”

More information can be found at dekra.com