Oleg Fomichev: Implementation of the risk-oriented approach will facilitate achievement of the optimal balance between public security and business costs


On October 2, 2015 Oleg Fomichev,   State Secretary , Deputy Minister of Economic Development of the Russian Federation, took part in the New Quality State Control: a Barrier or Incentive for Business debates held as part of Sochi-2015 International Investment Forum.

Participants discussed the extent the Russian federal and regional governments were ready to implement change in control and supervisory activities, changes the new system would bring to business, public, and government, as well as smart controls.

Oleg Fomichev commented that the Russian Ministry of the Economic Development developed a draft law on state and municipal control (supervision) in the Russian Federation and reminded that the document was submitted to the Russian Government on September 25.

He states that the draft law has stirred the public since it applies to the regulator, business, and the community with close attention being guaranteed.

“There are attempts to have a single law achieve too many goals that have nothing to do with control or supervision, hence certain issues with the draft law”, he explains. Mr. Fomichev believes that much is said about three priorities: revision of requirements, delegation of authority to the regional level, and amendment of the organizational structure. “These are considered to be the easiest foremost steps but in reality it is much easier to pass a law than take these steps,” the Deputy Minister comments. “Revision of these requirements is not that easy as they are not established by specific instructions but constitute the entire scope of business law that has governed our operations and has been enacted in the 20 recent years.”

“Revision of these regulations requires huge efforts. It is not enough to just say that we will set about it and do it fast cancelling everything we do not need anymore,” he emphasized. “The easiest step we can take right now is to say that we will discontinue use of the Soviet rules and regulations enacted by the Soviet government. But even this cannot be done instantaneously because control and supervision encompasses many areas where these rules and regulations have actual impact on occupational health and safety”. The draft law contains this provision and discussions are in progress to extend the transient period. The same is true about the regulator authorities as it is highly advisable that their merger, amalgamation, and reformatting is to be the result of a new system of requirements and risk controls. We need a principle to merge or divest these authorities or take other actions. “The current international principles no one has considered earlier entail one risk, one regulator. But generally, our economy does not have so many inherent risks apart from food quality, fire safety, environment etc.”, the Deputy Minister highlighted.

He believes that smart control is not only about law on control and supervision. The draft law is essential but mainly has an administrative function by setting specific principles to appeal to during reforms in a specific regulatory area and establish basic principles (about a risk-oriented approach to rely on during reforms).

By speaking more about the risk-oriented approach to control and supervision, the Deputy Minister commented that it was one of the draft law novations to streamline and optimize control and supervisory activities.

Currently, the number of risk categories and related inspection frequency per type of control and supervision will be set on a case-by-case basis to take into account the weaknesses of law No. 294, existing best practices in the area and optimize the distribution of the regulator’s efforts to the most sensitive areas.

The risk-oriented approach will also drive certain concessions for business (cancelling target inspections for low-risk facilities, differentiating inspection frequency depending on a risk category, providing opportunities for business to move to lower risk categories in case of a reliable inspection history in good faith).

The global experience in the use of the risk model certifies to the reduction of the total number of inspections from 30% of the time to a few tens of times. Certain businesses were completely exonerated from target inspections while the safety level in the controlled area could be maintained and even improved.

Oleg Fomichev concluded that the risk-oriented approach would drive an optimal balance between compliance, public security, and business costs. “The balance between public and business interests is expected to result in the reduction of excessive administrative pressure on business against a significant improvement of publicly important results of control and supervision,” he said.