Integrity-Driven Performance. New Strategy for ... - GRC Resource

More documents

Recommendations

Info

An integrated approach to GRC properly utilises culture, process and technology to addresscurrent and emerging GRC requirements and performance expectations. META Group research 3supports the view that an integrated approach to GRC is a value driver that provides competitiveadvantage while helping to manage risk. Respondents noted that an integrated approach canenhance the following performance dimensions:• Reputation value by 23%• Employee retention by 10%• Revenue by 8%It is important to note that an organisation committed to integrity-driven performance is notrisk averse. Rather, it understands risk, and takes a thoughtful, measured and disciplined approachto risk management. Such an organisation monitors and measures the performance of its GRCactivities, recognising that informed risk-taking – when aligned with the organisation’s values,policies and standards – is integral to an entrepreneurial spirit.Linking GRC to PerformanceAs META Group research 4 has shown, many business leaders view an integrated approach toGRC as a business enabler and value driver – a belief that has profound implications. The researchshows that business leaders perceive significant revenue, reputation and employee retentionbenefits flowing from an integrated approach. Furthermore, respondents believe that an integratedapproach could decrease cost of capital and insurance significantly. As the discussion on theMETA Group research at the end of this white paper illustrates, the link to performance, valueand cost management is clear.Other recent research validates the link to performance. Benchmarking analysis and research bythe General Counsel Roundtable 5 found that each additional dollar of compliance spending savesorganisations, on average, $5.21 in heightened avoidance of legal liabilities, harm to the organisation’sreputation and lost productivity. Substantial performance improvement opportunities may also begained by the integration of culture, process and technology.3 © 2003 META Group, Inc., Stamford, CT, U.S.A.4 Ibid.5 “Seizing the Opportunity, Part One: Benchmarking Compliance Programs,” © 2003 Corporate Executive Board,General Counsel Roundtable.8
Embracing a New Vision of ComplianceThe joint PricewaterhouseCoopers/EIU global survey of senior executives concluded that complianceis a serious gap at the centre of risk management that needs to be bridged and closed. 6 More thanhalf of the survey respondents identified “risk to reputation” as the single biggest risk facing theirorganisations today. Yet the vast majority of institutions did not feel they had the governance, riskmanagement and compliance infrastructure necessary to effectively manage this risk.The study concluded that the traditional approach to compliance, which focused on complyingwith laws and regulations, is inadequate. The study found that compliance with internal governance,ethics and risk standards and policies is more effective in protecting against risk associated withreputation. Yet the traditional definition of compliance risk – failure to meet legal and regulatoryrequirements – ignores these key elements, creating a gap that needs to be bridged.The New Definition of Compliance RiskThe risk of impairment to the organisation’s business model, reputation and financial condition(resulting) from failure to meet laws and regulations, internal standards and policies, andexpectations of key stakeholders such as customers, employees and society as a whole.– The Economist Intelligence Unit and PricewaterhouseCoopersIn the past, compliance requirements have not typically been addressed as core operatingrequirements. As a result, compliance processes tend to be disconnected and to grow layer uponlayer – adding cost, increasing the likelihood of duplication and inconsistency, and reducing theoverall agility of the business – in effect, increasing risk. This reactive approach also leaves a gapbetween the processes designed to keep the organisation in line with its regulatory obligationsand the policies needed to protect and improve the franchise.6 The PricewaterhouseCoopers/EIU survey, which included executives from 160 financial institutions in North America,Europe and Asia, was conducted in June 2003; copies of results are available at www.pwc.com.9
Page 6 and 7: Governance Reforms: A Snapshot of R
Page 8 and 9: Through our research and client wor
Page 12 and 13: As shown in Figure II-2, a new visi
Page 14 and 15: In our view, a leading GRC capabili
Page 16 and 17: Integrating GRC into Core Business
Page 18 and 19: Interestingly, many of the technolo
Page 20 and 21: PricewaterhouseCoopers developed th
Page 22 and 23: • The organisation deploys proces
Page 24 and 25: Governance ProcessesIn order to exe
Page 26 and 27: Successful GRC Process IntegrationG
Page 28 and 29: GRC performance enables greater bus
Page 30 and 31: Cost ManagementThe term “Total Co
Page 32 and 33: Organisations face an abundance of
Page 34 and 35: The Emerging Role of Technology: En
Page 36 and 37: Interestingly, in many organisation
Page 38 and 39: IV. The Governance, Risk & Complian
Page 40 and 41: The GRC Operating Model is both sca
Page 42 and 43: Envision Performance Driven by Inte
Page 44 and 45: Improve and Measure SuccessDevelop,
Page 46 and 47: The GRC Operating Model promotes op
Page 48 and 49: Implementing a sustainable reportin
Page 50 and 51: Appendix: Governance, Risk and Comp
Page 52: www.pwc.com/governance© 2004 Price

Integrity-Driven Performance. New Strategy for ... - GRC Resource

Create successful ePaper yourself

Delete template?

Save as template?