Businesses are facing increasingly onerous demands to comply with regulations from supervisory bodies, the European Union and US and UK anti-terrorism legislation, said Ian Angell, professor of information systems at the London School of Economics.
The growth in red tape will leave firms increasingly exposed to heavy fines and will place company directors at risk of criminal sanctions, without necessarily making the world a safer place, he claimed.
"Directors of businesses that do not have compliance officers are going to end up in jail," he said. "Not because they have done anything wrong, but because they have not complied with regulations."
Disgruntled employees and customers will increasingly use anti-crime or terrorism legislation to challenge firms that have failed to follow the correct regulatory procedures, Angell warned.
"Companies are going to have to keep copies of every telephone call, every PDA, and have procedures for monitoring the downloading of every data file," he said.
Growing numbers of firms are being prosecuted for failing to follow regulations. Deutsche Bank for example, was fined £2.9m in 2002 for not storing data properly.
However, the flood of regulation will create opportunities for IT departments to win more funding from boards, providing IT can win the battle with HR and finance to take over responsibility for compliance, he said.
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