Setting up an effective framework around governance, risk management and compliance is imperative for organizations both, small and large today. To better understand the degree of importance of this robust framework, it is essential for companies to comprehend how GRC has adapted with the changing business world to radically evolve and enhance the way companies operate now.
The turn of the 18th century changed the dynamics of the world dramatically. Cities expanded, population multiplied, household incomes grew and subsequently, the size of corporations increased too. The technological revolution coupled with improvised manufacturing processes, increased the scope of operations and level of enterprise risks dramatically. This meant that it was impossible for one owner to oversee his expanding business, which increased the demand to create policy and delegate decision making to sub-managers.
The previous century’s regulatory demands led to a construction explosion of frameworks in the 19th century. Governments across the globe began regulating the activities of corporations on small and large scale subsequently. While the first half of the century threw Federal Reserve & SEC, the second half which was post Second World War, generated environmental regulations & equal employment laws. The purpose of these frameworks varied across security issues, information protection, individual rights and to regulate how entities operated with each other.
Today, legal frameworks have become such an integral, indispensable part of the corporate world that it impacts their strategy development and management practices to insure that corporate objectives are achieved by maintaining compliance with regulatory requirements.
Corporate management has began adopting the standards created by professional standard bodies as a response to the financial compliance that is created, while regulatory bodies made use of these groups to generate technical content required for regulations. The adoption of frameworks such as ITIL, PMBOK, PCI and COBIT has increased with the extensive influence of technology on enterprise success. By following best practices many organizations today are able to establish governance processes that generate positive results while managing risks efficiently by keeping compliance at check.
There are no thumb – rules to resolve issues related to governance, risk or compliance. However, what can strengthen the structure of the framework and generate operational excellence is a thorough understanding of the business and the regulatory environment around it.
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