The risk landscape is changing at a fast pace. Day to day updates on risk and compliance carry warnings that the world is on its way, and they seem like new threats, which require compliance risk management. The emerging possibilities of upcoming risks and obstacles for risk leaders—indeed, all corporate leaders—are already evident. To cope with this, the strategic discussion about governance risk and compliance is also evolving.
For leaders today, vulnerability should be used as a method to produce value and reach higher levels of success. It's no longer just something to fear and mitigate.
To track the fraudulent activities in the organizations and compliance risk management, Sarbanes Oxley Act, 2002 was launched. Section 404 of the SOX Act made it mandatory for managers to inculcate adequate internal control structure and financial control procedures to protect shareholders' and the general public's interest.
It deals with risk and compliance issues, accounting errors and corrupt practices in corporations and to improve the transparency of corporate disclosures. The act has set deadlines for enforcement of management compliance and publishes criteria rules. Precisely, this act aimed at strengthening corporate governance and transparency, and compliance risk management.
A few trends can fundamentally alter the risk environment for businesses worldwide and change their approach towards them. Find them below.
Advances in computational technology, artificial intelligence, and data analytics help companies shift beyond conventional approaches to handle threats. Despite of such advanced technology, the human capabilities and their ability to customize the services as per the requirements of clients is unbeatable. Though, they might take support of the technology to some extent in high-risk scenarios.
Autonomous computation incorporates robotics and cognitive capabilities to make processes self-managing and self-defending. Still, they might lack a proper understanding of the situation in contrast to the changing trends. Therefore, human intervention holds great value in managing governance risk and compliance.
Smart devices (also known as the Internet of Things) are fitted with a wide range of sensors, networking and computing resources function as risk management and enforcement points. But, to keep track and carry out these services in a controlled environment, the involvement of industry experts is mandatory.
This offers companies the ability to identify compliance risk incidents, establish critical risk insights, and even take decisive action to manage risk and compliance. What are the consequences? Real-time, broad-based, dynamic compliance risk management and assessment.
Behavioural science is the study of human behaviour by rigorous analysis and scientific techniques, focusing on psychology, psychiatry, cognitive science, and social sciences. There is a rising need for these skills in the corporate world.
What drives reckless behaviour? How do cognitive prejudices lead people to inaccurate risk assessment? How can dangerous habits be identified and altered?
These are the kinds of questions that might trigger the need for managing risk and compliance that leading consultancies are trying to address with behavioural research.
Risk mitigation strategies are not generally fool-proof, and increasing investment in preventive approaches often produces just modest gains along with unwelcomed side effects such as slowing innovation.
Organizations are widening their methods to concentrate on caution (detection of trends that may signify or forecast risk events) and responsiveness (the ability to quickly contain and reduce the effects of risk events) as well.
Activities such as these should be expected to grow in importance: tracking external risks, detecting inconsistencies in business procedures, planning for risk-related workplace disturbances, managing governance risk and compliance.
Risk transfer mechanisms such as insurance and contracts are not recent but they are expected to play a more significant role in the face of ‘mega-impact’ risk incidents such as climate change, political instability, extremism and cyber-attacks.
In the past, few considered to hedge such threats by incorporating compliance risk management. It can quickly become popular as commercial third-party insurance, risk-sharing arrangements, captive in-house insurance, and other resources begin to grow. Financial market disruption is also generating new financial instruments to monetize compliance risk.
In the past, risk control has always been an exercise in managing governance risk and compliance, with organizations focusing solely on achieving the required compliance-driven practices. Everything is evolving. Most executives are now seeing threats in terms of their ability to drive success and value.
When risks become more observable and concrete, companies would be better able to define an accurate upside benefit of managing compliance risk—and to promote the optimal amount of risk-taking activity required in a bid to maintain a balance of risks and incentives.
If the pace of disruption accelerates across the business industries, it will get more difficult for regulators to keep up. In the meantime, numerous companies and other entities embrace innovation as a strategy—even if they fall beyond the reach of current regulations—and are reaping the rewards. The fast pace of creativity is driving the regulatory agenda of risk and compliance.
Businesses and other organizations became more integrated than ever before. They share information, technologies, and more. As a result, the high risk of threats is another thing to be observed.
They continually handle different types of risks, like compliance risk, in a way that reflects this modern reality—transforming their risk systems into more transparent and integrated approaches. This will solve the demands of a networked economy and collaborate to recognize, manage and minimize risk.
Corporate leaders are constantly focusing on threats that tend to undermine the underlying principles of their corporate strategies. Prioritizing these threats and managing them has become increasingly crucial. The risks cannot be dealt with in traditional corporate silos and will damage the company value-creation streams.
Yet, they also have the ability to form the base of game-changing moves for an organization if treated well. Keeping up with the disruptive technology, business paradigm transitions, and landscape shifts with experts' help will push executives to make major strategic decisions to achieve corporate progress.
In today's hyper-connected world populated by mobile devices, social media, and evolving social norms, information goes viral in few seconds and spreads like wildfire. This intersection of mobile and social media enhances the effect of credibility and compliance risks on companies. This forces them to reconsider their approach to manage risk and compliance to counter these intensified risks proactively.
With the growing risks and uncertainties in the corporate world, it is difficult for organizations to keep up with governance and risk compliance, along with managing their core activities. It has become essential to leverage services from experts to keep the organizations safe from legal issues and address risk and compliance issues.
At TRC Corporate Consulting, we have a team of experts who provide comprehensive solutions for resolving issues related to governance risk and compliance, as well as GRC in SAP. They follow a structured procedure, right from analyzing risks to providing remedial solutions for the same.
They offer customized solutions to the clients after analyzing relevant risk possibilities while keeping in mind the dynamic environment. With the expertise gained over the years, they are well-informed about all legal mandates and incorporate them into the strategies they devise.
Do you want to keep your organization away from governance risk and compliance issues? Contact us now!