Three’s company: Governance, risk and compliance

The promise of governance, risk and compliance technology is alluring, but getting it to work effectively is a different story, reports Alan Earls.

While governance, risk and compliance (GRC) management is nothing new, assembling these three disciplines continues to be challenging – particularly as companies look to optimize their compliance efforts to become more cost-efficient.

The growing focus on GRC as a single, unified framework grew out of the passage of the Sarbanes-Oxley Act of 2002 (SOX) and the requirement for publicly held U.S. companies to devise and implement governance controls to support the compliance mandates of SOX. Risk management, an implicit element in the SOX formulation, essentially came along for the ride, as companies recognized the possibility of addressing these topics from a holistic point of view. Read more

Managing Governance, Risk And Compliance

Creating an efficient system for managing governance, risk management and compliance (GRC) has become a top priority for most companies. Difficulties can hit businesses from many sides, be they improper financial disclosures, product recalls or alleged corruption in a foreign jurisdiction. These issues, combined with greater scrutiny from all quarters – regulators, ratings agencies, shareholders and customers – reinforce the need to integrate and align GRC matters to avoid conflicts, wasteful overlaps and gaps. GRC encompasses very different activities comprising corporate governance, enterprise risk management (ERM) and corporate compliance with applicable laws and regulations. Many companies have already started converging GRC management, but it is not an easy transition, given the broad cultural and technological requirements. Read more

Pushing Corporate Boards to a New Style of Governance

In the coming years, the pressure on corporate Boards will reach new levels. Enforcement agencies are scouring investigations and sources of information to bring civil and criminal cases against Board members. Activist shareholders know that the best way to push their agenda for reform is to challenge corporate Boards. A confluence of financial incentives, shareholder reforms, academic research and regulatory and enforcement focus is lining up to bring about significant change at the Board level.
Against these forces of change, corporate Board members have to adopt new strategies and avoid clinging to old ways. Many Board members complain about the overwhelming amount of information they are being provided, the increase in risks surrounding their own conduct and the over-regulation of corporate Board responsibilities. Corporate Boards are often “responsible” (through a mistake or a failure to act) for almost every corporate scandal. Read more