The blanket approach to regulation refers to a regulatory strategy that applies uniform rules and standards across an entire sector or group, rather than tailoring regulations to fit individual circumstances or entities.
This approach is often used when regulators believe that a broad set of rules can effectively manage risks and ensure compliance across a wide range of entities. The blanket approach can simplify the regulatory process, making it easier for regulators to enforce rules and for businesses to understand their obligations.
However, it can also lead to criticisms, particularly when the regulations do not take into account the specific needs, risk profiles, or operational differences of individual businesses. For instance, a small startup might struggle to comply with the same requirements as a large corporation, even if their respective risks differ significantly.
In summary, while the blanket approach to regulation can enhance efficiency and clarity, it may not always lead to optimal outcomes for all entities involved, highlighting a potential trade-off between simplicity and customization in regulatory frameworks.