Newsletter | Volume 1

Issue I
Issue II
Issue III
Issue IV
Issue V
Issue VI
Issue VII
Issue VIII
Issue IX
Issue X
Issue XI
Issue XII
Issue XIII
Issue XIV
Issue XV
Issue XVI
Issue XVII
Issue XIX
Issue XX
Issue XXI
Issue XXII
Issue XXIV
Issue XXV
Issue XXVI
Issue XXIX
Issue XXX
Issue XXXI
Issue XXXV

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Developing early warning for Black Swans

Often directors and managers tend to go for denial and they ended up with wheel barrows of varied number of compliance processes, duplication of efforts and controls and manual tests that confuse even the most basic regulatory control, that can only lead to a greater compliance breakdown… it is like taking more and more of the same medicine to cure the initial problem.

Regulators and oversight authorities continuously 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.

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. But 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 an context where it is getting increasingly difficult to find well-trained talent.

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 a 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 This approach is no longer valid, as companies are confronted with unprecedented GRC challenges of transparency and accountability.

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.

Clearly, boards and management are under a lot of regulatory scrutiny, as well as pressure to bring more value to the table from 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.