Collaborative regulation, based upon mutual respect between the regulator and members of the regulated industries, is less common than the other styles. 

There are examples in Australia of collaborative processes, such as the revision of the dispute resolution system in Western Australia and improvements in customer service in Queensland.  

Conscious collaboration is a little more common in some of the North American jurisdictions. 

For instance, in the State of New Mexico the issue of access to medical information about the claimant was a political and legislative controversy over the course of many years, until a broad based group of interested parties was assembled.  They were able to hammer out a compromise that was workable for all parties and that obtained broad based support when placed into regulation.

Collaboration in a regulatory environment works like this: A problem is defined and the regulator decides the outcome that is required. The outcome is non-negotiable. 

The regulator convenes representatives of the affected stakeholders and service providers and they attempt to reach a consensus over the method for obtaining the outcome.

If consensus is reached, the regulator accepts the consensus solution.

If the parties cannot agree, the regulator’s power to act is undiminished.

The approach is based on two ideas: first, that the parties know their businesses and personal situations better than the regulator can, and second, that there is always more than way to achieve a desired outcome. 

The regulator respects the ability of the people affected to devise a solution that they can live with, and the parties trust that the regulator will seek the outcome that is best for the system (or at least that which is demanded by law).

This approach greatly diminishes the passive resistance of the industry to regulation and the added costs and administrative burdens created in prescriptive regulatory environments.  

If the parties genuinely have their say in devising the solution, they are unlikely to manoeuvre around it, forcing ever tighter control by the regulator. As a result, regulatory initiatives tend to be more stable and durable and the industry does not have to respond to the added costs of constant change.

The approach also allows the regulator to keep the proper aims of the system in mind. 

If the question that the regulator has to answer is limited to the necessary outcome with respect to a challenge, then the focus remains on outcomes rather than process.

This allows the collaborative regulator to keep a focus on "the big picture".

It's not an easy process. Facilitating a group of stakeholders to come up with a consensus that meets their needs can be time consuming and difficult. 

The facilitator will need to be skilled to keep the process moving in a positive direction. 

It can be difficult to get good representation from the worker's perspective, without the economic overly that comes with allowing lawyers or unions to speak for them.

The regulator has to be represented, as an interested party, to protect the intent of the outcome and the commitment of administrative resources.

Most difficult of all, the regulator has to give up "control" and the expectation that the consensus result will be what was originally envisioned. 

Often, the parties at the table can devise something that is elegant and workable. But often it will not be the "direct" approach to which regulators are often accustomed. In return, the collaborative regulator shares the political risk of the solution with the other parties involved.

The risks of the collaborative approach include a failure to manage the process properly, resulting in gridlock and the danger of being perceived as heavy handed if it is necessary to step in and retake prescriptive control. 

There is also a need for the regulator to properly recognise emerging trends and risks at a point in time that allows for the consensus building process to take place before action is necessary.

The framing of the question, and a decision about the outcome the system requires, are critical.

Properly done, the collaborative approach creates an ongoing partnership between the regulator and the regulated and creates the possibility for innovation that might otherwise be missed. The process may also allow solution of an issue that is otherwise politically difficult.

Sometimes the regulator realises that a collaborative approach is appropriate.

Sometimes they are led to the table by stakeholders or service providers.

A participant-driven process usually starts with the question: "What outcome are you trying to obtain?” in response to a proposed regulatory initiative. If the regulator is then shown the possibility of other ways of achieving the same outcome, the process of seeking a collaborative solution can begin.

Understanding the styles of regulation allows those who are regulated the chance to participate in the shaping of the system in which they work. 

The same understanding will help regulators realise that there are possibilities for fulfilling their responsibilities that may be more effective or more appropriate, depending on the particular circumstances.

In both cases, the system can spend more time on returning injured or ill people to life and less time on unproductive activity.