DEVELOPING EARLY WARNING FOR BLACK SWANS
When directors and managers go for denial, they end
up with a wheelbarrow of varied compliance processes, duplication of efforts,
controls and manual tests that confuse even the most-basic regulatory control
that can only lead to greater compliance breakdown… it is like taking more
and more of the same medicine to cure the initial problem.
Regulators and oversight authorities
continuous issues report to even the best of the blue chip companies and
financial institutions that the company lacked effective systems of governance
and internal controls to adequately supervise the activities of operations
with respect to legal, compliance, and reputational risk and go on to
identify the lack of prudent controls, documentation, tests, etc. related
to specific compliance program.
Calls for higher GRC standards
Lawmakers and banking regulators are inflating another type of regulatory
crisis or bubble by overcompensating for past sins and introducing more
compliance almost everywhere.
We have to acknowledge the establishment of good governance standards
and the corporate responsibility to society that calls for higher GRC
standards. However, a growing number of companies now complain that the
flood of new-public policies and intensified regulatory scrutiny are bringing
unintended consequences.
A recent wave of high-profile executive departures highlights the need
for boards to regularly review succession plans and develop future leaders
in a context where it is getting increasingly difficult to find well-trained
talent.
Challenges of transparency and accountability
Many companies have eliminated formal training programs to reduce costs,
leading to fewer officers having the necessary expertise in GRC areas.
There is also an opportunity to drive the success of the company by filling
the board of directors with seasoned professionals whose backgrounds and
talents map directly to the challenges that companies are facing today.
Traditionally, many board directors have trusted management to make the
right decisions without asking for additional details on every question.
This approach is no longer valid, as companies are confronted with unprecedented
GRC challenges of transparency and accountability.
Bring value to the table and stakeholders
In the past regulations have been introduced in response to failing financial
institutions whose leadership placed a premium on chasing rapid growth
strategies without implementing sufficient risk management controls. The
Dodd-Frank Act puts additional burdens on financial institutions and other
companies of varied sizes and, therefore, on their board directors, particularly
in the area of risk management.
Board of directors and management are forced to spend their efforts on
regulatory scrutinies, rather than bring more value to the table and to
the stakeholders. The difference between board members and management
with hands-on GRC compliance and technology knowledge and board members
without can mean the difference between a company's success and failure.
At the 8th annual GRC summit,
Stine Bosse, Cand Jur, Chairman and Board Member, Adjunct Professor Copenhagen
Business Schoolwill speak on: IT and Data Security Becomes a CSR Issue
- (Inspiration from Scandals Like: Danish Nets, Global NSA Leaks and GSK
Corruption and Bribery Scandals)
