Compliance Cost

Every industry has rules. The more the industry impacts the consumer, the more rules there are. Enforcement of the rules entails people and programs at every level of the rules enforcement game. Implementing and enforcing the rules costs money. The compliance cost is the cost incurred by an industry to implement its rules.

Example: John wants to build a house. His plans have to be inspected by the city’s Building and Safety Department. That department is overseen by a state version, and the state version is overseen by a national version.

The compliance cost of all levels of an industry are huge. But so are the lawsuits. The demon is in the details, and the biggest demon is compliance.