The Importance of Governance, Risk and Compliance in Shifting the Business Culture

Organizations are facing new management challenges from market, financial & regulatory uncertainties in the current economic crisis. In the market front, new competitors are driving pricing pressures. Companies need to move to unfamiliar markets & technologies. Finding new markets, in the Emerging World, requires the development of new competencies which are not always available. In the financial front, shareholders are more demanding when dealing with market volatility. The global credit crunch became the main concern in this area since 2008. In addition, the worsening of fiscal terms is generating cost rises & difficulties in optimizing profitability. In the regulatory front, multiple law proposals complicate planning as companies anticipate systemic reforms. There's difficulties in managing the risks from the expansion of government's role in key areas of the economy.



Anticipating the potential impact of these new challenges on the companies is a time-consuming, & often a frustrating task, for its leaders. The continuous improvement culture helps companies to anticipate new risks & reply proactively to maximize their financial return. Companies are devoting increasingly resources to contingency planning & risk prevention to cope better with the range of new risks. A positive aspect of early business intelligence is that forecasting to anticipate new risks is also forecasting to identify new opportunities. It also helps to reply better to complex global interactions while dealing with unpredictable crises.

Other companies are using different strategies, including investing in government relations capability, updating of the compliance functions, investing in IT to support new regulations, improving in their own capability for speedy implementation of requirements, focusing to key compliance issues, & expanding of compliance focus to their outside partners, as well as, their suppliers & customers.

The proper management of a Governance, Risk & Compliance framework will identify strategies to address these challenges. Companies are strengthening their governance processes & risk culture with reinvigorated risk procedures & more upper management involvement. According to the Business Risk Document 2010 issued by E&Y, 59% of the global companies are addressing these challenges by a risk management function. Over 70% of the surveyed companies in the financial areas reported that a powerful risk management function is effective to address compliance & regulation threats.

The main difference between success & underperformance comes from the skill with which a Governance, Risk & Compliance program is executed. There's not nice of bad programs, but executions of programs. The Governance, Risk & Compliance area is moving companies forward from the retrospective analysis of business decisions gone wrong to anticipate new risks in a challenging world.