Governance, risk management and compliance — Effectively increase the risk information culture

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Since the early 2000s, several industry and government agencies have expanded their compliance rules that address enterprise risk management plans, policies, and procedures.

Picture: What you need to know: supply chain risk management and geopolitical risks

Compliance managers are almost always under pressure from senior stakeholders to communicate as accurately as possible the status of risks and compliance controls in real time. Material risk information is collected and communicated throughout the organization in a timely manner, enabling staff, management and the Board of Directors to fulfill their responsibilities. While all three lines of business must work together to identify and mitigate risks, compliance experts must proactively identify and manage compliance risks and help the organization avoid potential violations of regulations or policies. Organizations need integrated views of risk, formal risk management policies and coordinated responses to risky events, as well as tools to manage risk. To manage risk effectively, management and the board need a practical approach to risk management and the operational discipline to implement this approach at the enterprise level. If an organization wishes to manage risk effectively, risk management must be integrated into day-to-day business practices. While business leaders can help shape the desired culture, this alone does not guarantee the right day-to-day risk management decisions. However, appropriate structural and organizational choices, descriptions of roles and responsibilities and appropriate definitions of organizational units and reporting lines are essential to ensure that business risk is reliably and effectively managed.

The mindset and behavior of individuals and groups within an organization—not just an at-risk organization—plays a critical role in implementing a company’s business risk management strategy. . The goal should be to determine the most effective ways to integrate risk into their core management processes. A risk-based methodology helps companies rethink their enterprise risk management so that senior management and the board have appropriate information about risks and opportunities to support decision-making in the development of management strategy and effectiveness.

What is a culture of risk intelligence?

A risk intelligence culture is characterized by aligning risk management with organizational strategy and promoting an integrated approach to risk management and assurance. A risk culture is the glue that binds together all the elements of the risk management infrastructure, reflecting common values, goals, practices and reinforcement mechanisms that integrate risk into organizational decision-making and governance. A risk culture is also the cornerstone for balancing the inevitable tension between creating business value through innovation and efficiency on the one hand, and protecting business value through the appetite for change. risk and risk management on the other hand.

Picture: Why location risk intelligence and monitoring is crucial for modern businesses

To be successful, companies must adopt a top-down approach to risk and compliance management, and create a culture of risk awareness. A culture that promotes effective risk management encourages openness, upward communication, sharing of knowledge and best practices, continuous process improvement and a strong commitment to ethical and responsible business conduct. Turning sentiment into a strong risk culture requires employees to be clear about how their decisions and actions affect the larger business mission. Good tone emphasizes high ethical standards and a culture of compliance, but it must be balanced with a message that empowers managers to take appropriate risks in pursuit of short- and long-term business benefits. Take into account the impact of changes in strategy and organization, as well as the occurrence of external events, including changes in the regulatory framework, when assessing the need for changes to strengthen the risk culture . After performing an initial assessment of the current risk culture, senior management should consider the need for organizational change and take steps to implement it as directed by the board. In contrast, risk management, corporate governance and compliance are all part of an integrated risk management process. Therefore, risk management plans increasingly include business processes to identify and control threats to their digital assets, including private business data, personally identifiable information (PII), and intellectual property. Responses to risks are generally based on their perceived severity, including controlling, preventing, accepting, or transferring to third parties, while organizations typically manage a wide range of risks.

Define a composite risk profile suitable for the digital age

Although interpreted differently by different organizations, GRC generally covers activities such as corporate governance, enterprise risk management (ERM), and corporate compliance with applicable laws and regulations. The disciplines, their components and their rules must now be brought together in an integrated, holistic and enterprise-wide manner (the three main characteristics of GRC) — in accordance with the (business) operations managed and supported by the GRC. The culture and tools used by risk and compliance management teams are evolving with IRM to increase transparency and standardization across the organization. Embedding more sophisticated quantification and monitoring capabilities into the day-to-day execution of a company’s strategy and focusing on material risks and opportunities can help management define an era-appropriate composite risk profile. digital. An integrated compliance data model that can provide a contextual view of risk, i.e. in terms of its relationship to other risks, as well as controls, regulations, policies, functions and objectives, is also of great value. Technology can increase stakeholder risk awareness by providing transparency of risks across the organization and consistent, reliable data on the potential impact of those risks. This ability to understand and control risk allows organizations to have greater confidence in their business decisions. However, in more and more cases, CEOs and business leaders are adopting a more proactive attitude, as their objective is to further develop their risk management skills (based on their strategic and economic priorities and their aspirations). increasing). In the end, they are able to gain a real competitive advantage and increase the value of the company while taking into account the risks. For example, the ISO 31000 principles provide a framework for improving risk management processes that can be used by companies regardless of organization size or target industry. Although ISO 31000 cannot be used for certification purposes, it can help provide guidance for internal or external risk audits and allow organizations to benchmark their risk management practices against internationally recognized benchmarks.

Picture: Integrated risk management approach

Integrated solutions can also help organizations define and link key compliance elements, such as objectives, processes, risks, controls and rules. For example, an organization may need to comply with new data privacy regulations (compliance activities) that help reduce IT risks (asset risk management activities) and certain internal data protection controls. data (corporate governance activities). When there is no collaboration or integration between different compliance departments, be it policy management, compliance risk management, regulatory change management, management of compliance cases or regulatory reports, there will be a lot of work and duplication of data.

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