{"id":3726,"date":"2014-02-09T15:41:36","date_gmt":"2014-02-09T15:41:36","guid":{"rendered":"http:\/\/www.chaordicsolutions.co.uk\/blog\/?p=3726"},"modified":"2014-04-13T20:59:58","modified_gmt":"2014-04-13T19:59:58","slug":"embrace-the-hidden-power-of-governance-risk-and-compliance-but-not-in-the-way-you-think","status":"publish","type":"post","link":"https:\/\/www.chaordicsolutions.co.uk\/blog\/from-our-grc-consultants\/embrace-the-hidden-power-of-governance-risk-and-compliance-but-not-in-the-way-you-think\/","title":{"rendered":"Embrace the hidden power of governance, risk and compliance … but not in the way you think!"},"content":{"rendered":"

\"connections\"<\/a>We live in exciting but unchartered,\u00a0dangerous times.\u00a0 But it is vitally important for our continued survival that we learn to better manage\u00a0the highly dynamic and complex interrelationships between\u00a0critical areas such as governance, risk and compliance.<\/p>\n

DOWNLOAD<\/strong> PDF copy of this Insight Blog Article<\/a><\/p>\n

CHALLENGES<\/strong><\/span><\/p>\n

Many\u00a0would claim our\u00a0current economic climate is partly or wholly due to a significant number of corporate failures which\u00a0have challenged the very foundations of the global economic system.\u00a0 These failings can be argued as\u00a0being evidence of an ineffective approach to managing governance, risk and compliance activities.\u00a0 Transparency, sustainability and ethicability are words that now dominate the corporate landscape \u2026 but trust seems to have been fatally wounded.\u00a0 Clearly, there is much that needs to be improved about the way we run our modern organisations.<\/p>\n

\"dawn\"<\/a><\/p>\n

Over the last ten years or so, the acronym GRC has been used to describe an integrated approach to managing these components.\u00a0 During this period, the Open Compliance and Ethics\u00a0Group<\/a> (OCEG) has emerged as the only non-profit organisation dedicated to promoting a framework to support this.\u00a0 However, it is important to recognise that there are other ways of achieving a similar level of integration which should also be considered.<\/p>\n

A coordinated approach to managing this complexity makes sound sense and in isolation, on paper, can be easily justified.\u00a0 However, the barriers to effective implementation are many and need to be better understood.\u00a0 The realities of the new world in which we all now live and work are such that we can no longer accommodate inefficiencies in our critical functions and processes.<\/p>\n

OPPORTUNITIES<\/strong><\/span><\/p>\n

The time has come for us to look at our organisations\u00a0in a different, much more holistic, synergistic and sustainable way.\u00a0 An integrated approach to managing governance, risk and compliance provides us with a way of achieving this, but only if we learn from the past and provide the correct environment for our efforts to succeed.<\/p>\n

\"watering\"<\/a>Everything we do involves a combination of governance, risk and compliance… from the biggest undertaking to the smallest activity \u2026 in the boardroom, at the project, portfolio or programme level and everywhere else in the organisation.\u00a0 However, the extent to which these activities are\u00a0effective depends so much on the way in which these three critical functions are integrated or more accurately, coordinated.<\/p>\n

Last year, the Institute of Business Ethics<\/a> (IBE) published\u00a0very interesting\u00a0research about the state of governance and ethical behaviour across the European Union. In this report <\/a>there is a great graphic on page 7 that shows IBE’s\u00a0view on the ethical aspects of corporate governance and provides further clarity on the\u00a0pivotal, leading role\u00a0it provides.<\/p>\n

\"Capture\"<\/a>It is also important to note that\u00a0achieving governance, risk and compliance nirvana does not automatically need us to\u00a0deploy new systems or technology… but sometimes they are required\u00a0to help provide a more robust foundation on which use\u00a0appropriate facilitating tools and techniques.<\/p>\n

 <\/p>\n

So let’s start to have a look at why these areas are so important:<\/p>\n

G – GOVERNANCE<\/strong><\/span><\/p>\n

From research conducted last year by the author, it is clear that one of the biggest barriers to the effective harmonisation of these essential organisational elements is culture.\u00a0 Subsequent research has suggested that specifically it is the culture of the boardroom… governance culture… which\u00a0determines the extent to which harmonisation efforts can be achieved.\u00a0 But how do you influence governance culture to make it more receptive to harmonising governance, risk and compliance activities… the silos that traditionally constrain the extent to which organisational activities can be optimised?<\/p>\n

There are no easy answers or solutions to this conundrum. Recently, exciting initiatives such as ethical leadership and OCEG\u2019s Principled Performance approach may provide part of the solution for achieving this. \u00a0But it is clear than none of these are quick-fix solutions and require considerable, sustainable commitment of board members to bring about the required changes.<\/p>\n

In some circles, the G in GRC is now being replaced by P representing the importance that performance plays in bringing about the required changes in organisational behaviour.\u00a0\u00a0This is possibly a good move as there\u00a0still seems to be some considerable confusion as to what governance really means.\u00a0 From the authors own\u00a0real-life experience it\u00a0often simply represents\u00a0the various\u00a0facets\u00a0of corporate leadership which\u00a0ultimately set the scene,\u00a0the tone at the top, that the organisation has to operate within.\u00a0 It is for this reason that ethical leadership may provide an important part of the\u00a0solution which\u00a0is needed.\u00a0 Of particular interest in this area is the\u00a0work of Roger Steare<\/a>,\u00a0Linda Fisher Thornton<\/a>\u00a0and others, who are\u00a0now actively challenging the way in which our organisations are led by\u00a0pushing for a more ethical driven approach.<\/p>\n

Another\u00a0interesting development is the growing recognition of something called conduct risk.\u00a0 This has\u00a0recently received\u00a0further emphasis by the publication of the UK Financial Conduct Authority’s\u00a0(FCA)\u00a0Risk Outlook 2013<\/a>\u00a0in which consideration attention is given to\u00a0discussing the drivers of conduct risk and the evolving conduct risk landscape.<\/p>\n

R – RISK<\/strong><\/span><\/p>\n

An example of how the lack of a joined-up approach can cause problems\u00a0is found\u00a0in the way\u00a0risk is sometimes handled. The management of risk can easily fall victim to the use of a siloed approach to running a business. There have been many recent business failures that can be directly attributed in whole or part to this siloed and disjointed approach to managing risk.<\/p>\n

The absence of a risk-friendly appetite and culture can also create very\u00a0real barriers that\u00a0prevents board and other key stakeholders from seeing a\u00a0complete joined-up picture of what is really happening within their organisation.<\/p>\n

In the last couple of years there has been significant attention given to this and these related\u00a0challenges of risk appetite and culture; one of the main contributors to this thought leadership debate has been the work of the Institute of Risk Management<\/a> (IRM).\u00a0 However, producing thought leadership materials is one thing but actually implementing them is another completely different matter.\u00a0 It is for this reason that the author is particularly interested in how the culture … particularly, governance culture … can be influenced to enable it to be more receptive to actually successfully implementing the required\u00a0fundamental changes in\u00a0attitudes,\u00a0behaviour and ultimately, culture.<\/p>\n

C – COMPLIANCE\u00a0<\/strong><\/span><\/p>\n

The threat of regulatory failure has created a culture in some organisations\u00a0where\u00a0it sometimes seems as if sight of the bigger picture has been lost.\u00a0 There are now even case studies available about organisations who previously held best practice, world class positions\u00a0only to find that because of changes in their approach to compliance and other factors, their culture changed so\u00a0significantly that they not only lost these enviable positions but also got fined by regulators for breaches in compliance;\u00a0in some extreme cases, they now appear in text books as to how quickly\u00a0you can\u00a0lose your reputational standing if you don’t keep in touch with the bigger picture and what is really happening in your organisation!<\/p>\n

It is so easy in the current climate to create a culture where individuals blindly follow processes and procedures at the expense of common sense.\u00a0 With the increasing amount of regulation and standardisation,\u00a0it often\u00a0seems as if individuals have lost the ability to behave ethically. The result can be an increasingly disengaged workforce that sometimes appear to mentally switch-off on arrival at work and who only really wake up again when it is time to go home!<\/p>\n

A recent TED Talk<\/a> by\u00a0Yves Morieux from BCG provides a supporting and slightly controversial view as to why\u00a0people feel so miserable and disengaged at work.\u00a0 In his view, it is because today’s businesses are increasingly and dizzyingly complex,\u00a0and traditional pillars of management are obsolete!\u00a0 However, he proposes six key rules to\u00a0encourage employees to cooperate in order to solve long-term problems.\u00a0 Yves believes\u00a0that it isn\u2019t just about reducing costs and increasing profit,\u00a0it\u2019s about maximising engagement through all levels of an organisation.<\/p>\n

The increasing amount of regulation seems to be a reflection of the backward facing approach that is quite often adopted by our regulators.\u00a0 Unfortunately,\u00a0instead of improving the situation and reducing risk, this approach\u00a0sometimes\u00a0creates more risk and on occasions,\u00a0even\u00a0encourages\u00a0unethical behaviour.\u00a0 In response to this, there are an increasing number of people who are\u00a0now suggesting we need less not more regulation and a return to a much simpler\u00a0Aristotelian based approach to ethical corporate leadership.<\/p>\n

CONNECTING THE DOTS<\/strong><\/span><\/p>\n

In trying to make sense of all of this, it can\u00a0become very frustrating.\u00a0\u00a0From looking at real-life experiences in this area, there appears to have been\u00a0much talking and even more selling but very few tangible examples currently that clearly demonstrate\u00a0the business benefits of adopting such an integrated approach.<\/p>\n

That doesn’t mean they aren’t out there, simply that they are difficult to find.<\/p>\n

\"labels\"<\/a>So we are clearly all on a journey, just like the\u00a0members of the IRM Special Interest Group (SIG) in GRC<\/a> that the author helped to launch and\u00a0currently leads.\u00a0 In the last SIG session\u00a0<\/a>held on 16 January, members reflected on what has been discovered so far about this thing we call GRC and where the focus should be over the coming year.\u00a0 One of the key areas we have decided to\u00a0look at in more detail\u00a0are\u00a0the\u00a0value\u00a0benefits of adopting\u00a0this\u00a0more integrated, coordinated\u00a0approach, and how can these be\u00a0leveraged to provide a stronger business case for securing the required commitment from\u00a0key stakeholders.<\/p>\n

Everything we do involves a combination of governance, risk and compliance… from the biggest undertaking to the smallest activity \u2026 in the boardroom, at the project, portfolio or programme\u00a0level, and everywhere else in the organisation.\u00a0 So the time is\u00a0now right for us to unleash and embrace the hidden potential of these powerful elements\u00a0…\u00a0 but possibly in a different way to how you have been thinking about doing it\u00a0previously.<\/p>\n

READY\u00a0FOR CHANGE?<\/strong><\/span><\/p>\n

Our unique ORDER<\/a>\u2122 approach\u00a0is truly scalable,\u00a0leveraging\u00a0the terrific potential of applying\u00a0this\u00a0more holistic, synergistic and sustainable\u00a0approach to any challenge\u00a0… at whatever level it might exist within the organisation.<\/p>\n

\"life\"<\/a>This is particularly evident in our REVIEW<\/a> and RESCUE<\/a> services where we can help you recover a project, portfolio, programme or some other form of strategic implementation initiative that is failing to deliver on expectations.<\/p>\n

 <\/p>\n

If you want to explore these\u00a0or any other\u00a0of our services<\/a> then contact\u00a0Robert J Toogood direct at robert_toogood@chaordicsolutions.com<\/a> or on +44 (0)1983 617241 for a no-obligation, confidential discussion about how we can help.<\/p>\n

REFERENCES<\/strong><\/p>\n

Open Compliance and Ethics\u00a0Group (OCEG): http:\/\/www.oceg.org<\/a><\/p>\n

Institute of Business Ethics (IBE): https:\/\/www.ibe.org.uk<\/a><\/p>\n

Roger Steare – Corporate Philosopher: http:\/\/www.thecorporatephilosopher.org<\/a><\/p>\n

Linda Fisher Thornton – Leading in Context: http:\/\/leadingincontext.com<\/a><\/p>\n

UK Financial Conduct Authority (FCA) – Risk Outlook 2013: http:\/\/www.fsa.gov.uk\/static\/pubs\/other\/fcarco.pdf<\/a><\/p>\n

TED Talk – Yves Morieux, BCG: http:\/\/bit.ly\/1cjJ1fJ<\/a><\/p>\n

Institute of Risk Management (IRM): http:\/\/www.theirm.org\/publications\/PUpublications.html<\/a><\/p>\n

IRM Special Interest Group (SIG) in GRC – Web Page: http:\/\/www.theirm.org\/events\/GRC_SIG.htm<\/a><\/p>\n

IRM Special Interest Group (SIG) in GRC – Presentation from Last Session: http:\/\/www.theirm.org\/events\/documents\/GRCSIGpresentation160114.PDF<\/a><\/p>\n

AUTHOR<\/strong><\/span><\/p>\n

\"POST<\/a>Robert J Toogood is the Senior Partner of Chaordic Solutions, a consultancy that specialises in bringing order to organisational change \u2026 by embracing governance, risk and compliance.<\/em><\/p>\n

Over the last twenty-five years, Robert has recognised the increasingly important role that governance culture plays in providing a foundation for organisational success. His recent masters research into the barriers to implementing an integrated approach to governance, risk and compliance has provided tangible evidence to support this view.<\/em><\/p>\n

In conjunction with his ongoing consulting activities, he is now developing practical solutions to address these barriers through his part-time doctorate research activities.\u00a0 However, in undertaking this further research he is passionately committed to making sure his activities remain firmly on the ground and solve real-world not purely academic challenges.<\/em><\/p>\n

DOWNLOAD<\/strong> PDF copy of this Insight Blog Article<\/a><\/p>\n

\u00a9 Copyright 2014. All Rights Reserved<\/p>\n

 <\/p>\n

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