Companies still wrestle with linking risk to strategy.
A survey by The Economist Intelligence Unit, commissioned by KPMG, the global audit, tax and advisory firm, reveals that 50 percent of US boards and 41 percent of boards worldwide now take governance, risk and compliance (GRC) very seriously. But there is one aspect that is moving ahead at a snail’s pace: convergence.
With GRC sitting prominently at the top of boardroom agendas, executive managements are concerned that companies fail to effectively integrate these components into their overall business strategy.
The survey, called The Convergence Evolution, found that leading companies are working toward a holistic – or converged – approach, and have started modifying the governance framework (such as board oversight) to integrate business risk and compliance management.
If companies can achieve this, it helps them maximize resources and minimize duplication of effort across the enterprise. Also, a company can quickly assess and remediate its strategies before a major corporate disaster strikes.
The reason for lack of convergence can be seen in the report’s figures, however. Approximately 90 percent of respondents found GRC costs had significantly increased, a clear indication of the higher priority placed on GRC and a potential sign that companies are still grappling with managing these processes. But a staggeringly low proportion, just 7 percent, of US organizations (9 percent globally) say their GRC activities are fully integrated into their business strategies, the report found.
Those polled identified executive management (42 percent in the US, 48 percent globally) and regulators (27 percent in the US, 43 percent globally) as the main stakeholders calling for organizations to enhance convergence of their GRC activities.
‘As compliance needs grow with the ongoing release of new regulatory standards, corporate boards want assurances that senior executives are managing risk appropriately, and C-suite executives, in turn, increasingly have an eye toward bringing all associated processes under one roof,’ says Deon Minnaar, a KPMG partner who leads the firm's governance, risk and compliance network. ‘Convergence provides an increasingly popular common-sense approach.’
The survey polled senior risk decision-makers in June 2011 from a wide range of industries and regions.
