Risk & Compliance management and its relationship to value
Alex Grahovac
Technology has revolutionised the way we do business today. It has also raised the stakes in terms of how companies produce, compete and “exist” in our ever expanding global markets. More and more, today’s companies are challenged to be effective and competitive. This requires not only a keen understanding and management of underlying business processes and production systems. Risk profiles and compliance status must also be known.
While technological advances have stoked the engines of productively by increasing output while reducing costs, they also provide better communication tools and analysis capabilities. This enables us to look deeply into our most vital business processes. Tools that enable better visibility of our ability to manage processes and meet standards and legislative requirements also provide a window into the very core of how the firm operates.
Yet we often overlook and underestimate the value and potential of these capabilities. The visibility and insight these tools and technologies afford us are far too often ignored by management.
For example, firms will often integrate technology with processes in order to increase output of products and services, or to reduce their costs. Yet often those same companies view their regulatory compliance obligations as - at worst onerous and - at best -necessary, but inherently burdensome. This traditional view often fails to seize the opportunities provided by enterprise-wide risk and compliance management systems. These systems can provide much more than audit protection; they can provide new insights into a broad range of internal and external business processes. The harnessing of this additional insight can be used to eliminate waste, tighten governance and lower costs. This generally further streamlines and enhances the effectiveness and competitiveness of the organisation itself.
Compliance is not always seen as belonging to an overall production and systems improvement strategy. It is often treated as a necessary evil; one that is begrudgingly monitored as an external inconvenience. Yet it can be a tool to gain increased visibility into the inner workings of the firm. Through this, management can further improve output, quality and reduce costs.
Too often seen as a burdensome “outside” requirement, the actual cost and consequence of external compliance measures are often buried in the various unaccounted-for and unquantified controls overheads. They go largely unmeasured in terms of effectiveness, and are often not aligned to other mission-critical productivity controls. The overall number of controls put in place by large companies in order to meet external compliance requirements can be staggering, often numbering in the thousands. These controls themselves can often generate excessive of hours of work that are frequently undocumented, and unaligned to other internal cost and quality controls. The cost and impact on productivity of these compliance controls and measures are usually never measured, and remain unknown.
In order to align controls with costs they must be measured and quantified. They need to be evaluated against the firm's overall objectives and obligations. Yet most large organisations today do not know whether:
- “Compliance X” also has an effect (positive or negative) in terms of the quality or cost of my product/services?
- If so what is the effect and what is its net cost to the business?
- How many of my compliance controls are manual vs. automated?
- Can the overall number and cost of the controls be reduced while still meeting external requirements?
- How does the overall reduction or increase of the number or quality of the controls affect my corresponding risk profile?
Quality Award Partners® have long held the view that Compliance and Risk are in fact two sides of a coin. While dealing with one side of the coin, one is always aware that the other side, although not immediately visible, is always there and by definition connected. While risk is an inherent part of a company's function and existence, it exists in real time, and always has random unpredictable aspect to it, impacting on objectives. Compliance obligations, on the other hand, are the set of controls that a company imposes or has imposed on it in order to ensure outcomes meet certain standards of performance. The two are linked, but are separate perspectives.
When a proactive, systems-based approach to Risk & Compliance management is applied, real and tangible value can be created - over and above immediate and obvious external compliance expectations.
Advent ManageR™ enables your organisation to manage its risk and compliance obligations using an automated process. Existing data can be uploaded into the program or entered directly. The Advent ManageR™ program assists your organisation to comply with AS 3806 for Compliance Programs. A wide range of Compliance obligations can be entered: legal and regulatory, international, national and industry standards. You are only limited by your imagination.
Additionally, and perhaps more importantly, Advent ManageR™ can be used to manage internal quality and performance processes obligations such as contracts, contractors, vendors and suppliers obligations and much more…the possibilities are truly endless.
Contact us now, and find out how Advent ManageR™ risk and compliance software can simply and effectively manage your compliance obligations, to reduce costs and improve your performance.