Governance, risk, and compliance with business finance

Governance, risk, and compliance came to a new beginning after the collapse of Enron, WorldCom and other corporate accounting scandals in 2002. Companies all over the world have been literally forced into adopting better, more effective governance, risk, and compliance approaches with business finance. Governance, risk, and compliance solutions have helped organizations establish corporate accountability by enabling them to manage business risks more effectively. There are however some serious challenges left when it comes to

There is much focus today given to compliance but the difference between governance and compliance is slight. When we talk about governance, we are talking about protecting and increasing share holder value. Compliance is a key component to good governance which is rooted in best practices that can lead to a very competitive advantage. Where some believe that compliance only creates more waste, the process of compliance can be changed into real business value. If properly implemented a company should become more quick witted and should be able to lower operational costs. This in return will maximize your return on investment which essentially is a proxy for good governance.

Ensuring better management for compliance needs
There are several things that can be done to ensure that your company can better manage its compliance needs. The following are just a few ideas:

• Make sure that management avoids the temptation to approach compliance from a project perspective. This type of approach is appealing to business management because at first glance it looks much less expensive. It also appears to require less time. It will however create a reactive organization that has no ability to detect or prevent problems which in turn will drastically increase your costs.


• Management should consider integrating compliance tasks into daily business processes. When you integrate compliance and risk management, management can implement preventative, real time controls, and find correct violations early enough to fix them.


• Changing your business approach to compliance from a project based approach to a process based approach can help improve and optimize the organization's performance.

How to implement good governance and compliance
Starting with the top is the best way to improve and implement governance policies successfully. Executives and upper management set the tone really on whether or not a business will successfully implement good governance and compliance. Since senior executives are accountable for their company's compliance initiatives their tone is critical. Setting a high standard with the top management is the only way to make everyone understand that compliance is the number one priority. If employees see that executive management is taking compliance seriously and constantly monitoring its success they will quickly embrace the same attitude creating success throughout the entire company.

Mark Opausky has outlined five steps that can be taken to good governance:

1. Establishing a comprehensive understanding of the risks your business faces for a given cycle.


2. Deciding what your risk appetite is for a given fiscal year cycle


3. Communicating clearly the strategy to enterprise


4. Empowering management and making them accountable


5. Accurately measuring your success and making the necessary improvements

Understanding how governance, risk, and compliance play a part in your business is critical to helping you create a more effective financial foundation. It can save you time, money, and decrease risks of your business through thorough understanding.