{"id":1355,"date":"2022-09-26T11:12:01","date_gmt":"2022-09-26T11:12:01","guid":{"rendered":"https:\/\/essencenetworks.com\/essence\/?p=1355"},"modified":"2026-09-13T14:59:45","modified_gmt":"2026-09-13T14:59:45","slug":"the-economic-case-for-standards","status":"publish","type":"post","link":"https:\/\/essencenetworks.com\/essence\/the-economic-case-for-standards\/","title":{"rendered":"The economic case for standards"},"content":{"rendered":"<h2>The economic case for standards<\/h2>\t\t\n\t\t\t\t\t<ul>\n\t\t\t\t\t<li itemprop=\"about\">\n\t\t\t\t<a href=\"https:\/\/essencenetworks.com\/essence\/category\/risk-management\/\">Risk Management<\/a>\t\t\t\t\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t<p><\/p>\n<p class=\"wp-block-paragraph\"><\/p>\n<p class=\"wp-block-paragraph\" id=\"top\">Technical standards are a contentious topic in many industries. They add cost to businesses \u2013 taking a share of budget that would otherwise go to more profitable objectives. They also add cost to compliance enforcement and monitoring programmes \u2013 who also have significant budget constraints.<\/p>\n<p><\/p>\n<p class=\"wp-block-paragraph\">Not all standards are created equal. Some standards such as the COSO\u2019s Enterprise Risk Management Framework, the XBRL Business Reporting Standard and the ISO 31000 are widely adopted across industry &#8211; whilst others languish as unsold inventory. In most cases, they require significant investment in time and intellect.<\/p>\n<p><\/p>\n<p class=\"wp-block-paragraph\">It follows then, that investment in standards should be properly justified.<\/p>\n<p><\/p>\n<p class=\"wp-block-paragraph\">Standards are a public good to the extent that they facilitate the cooperation of people and organisations towards a common objective. They are a shared resource, that when made publicly available at a reasonable cost oils the machines of government and commerce. Where would we be without the standardisation of electrical plugs, international phone dialling codes or the Internet protocol? These didn\u2019t necessarily encourage the most technically sophisticated design but they succeeded because they facilitated benefits from cooperation.<\/p>\n<p><\/p>\n<p class=\"wp-block-paragraph\">We believe standards should be adopted where practical but only when they can be compared with other non-standard options on its own merit. In practice, this is difficult to achieve because it is often far too easy to implement a unique way of doing things then selling people on a generic approach.<\/p>\n<p><\/p>\n<p class=\"wp-block-paragraph\">This is why, in practical terms, standards should be closely associated with the strategy management and policy functions of organisations. It is often easier to provide a strong economic justification for a standard when it is linked to a winning strategy, leadership intent and financial objectives. It is possible to quantify benefits of standards adoption but more practically so within a strategic context than on a case-by-case basis.<\/p>\n<p><\/p>\n<p class=\"wp-block-paragraph\">For example COSO\u2019s ERM Framework emerged in response to a crisis in the financial industry. It is supported by legislation. Organisations have strategic advantage in complying to it. Network externalities \u2013 the benefit to others from compliance \u2013 extend far and wide: even to the growth of regulatory technology \u2018regtech\u2019 innovation. Over time, industry has shaped the evolution of COSO ERM to be simpler and less expensive to implement. Viable, lower cost alternatives \u2013 such as ISO 31000 have emerged.<\/p>\n<p><\/p>\n<p class=\"wp-block-paragraph\">In our approach to Governance Risk and Compliance, we are committed to the practical adoption of standards where it make sense to decision makers, increases cooperation between organisations, improves competitive advantage and tangibly contributes to the public good.<\/p>\n<p><\/p>","protected":false},"excerpt":{"rendered":"<p>The economic case for standards Risk Management Technical standards are a contentious topic in many industries. They add cost to businesses \u2013 taking a share of budget that would otherwise go to more profitable objectives. They also add cost to compliance enforcement and monitoring programmes \u2013 who also have significant budget constraints. Not all standards [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2943,"comment_status":"closed","ping_status":"open","sticky":false,"template":"elementor_theme","format":"standard","meta":{"footnotes":""},"categories":[11,10],"tags":[],"class_list":["post-1355","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-compliance","category-risk-management"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The economic case for standards - Essence Networks<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/essencenetworks.com\/essence\/the-economic-case-for-standards\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The economic case for standards - Essence Networks\" \/>\n<meta property=\"og:description\" content=\"The economic case for standards Risk Management Technical standards are a contentious topic in many industries. They add cost to businesses \u2013 taking a share of budget that would otherwise go to more profitable objectives. They also add cost to compliance enforcement and monitoring programmes \u2013 who also have significant budget constraints. 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