Globalization, access to new markets, and improvements in technology have enabled businesses enjoy unprecedented access to new and exciting opportunities. However, the new business environment has also resulted in significant increase in risks and corporate governance issues for small and big organizations.
In such a scenario, an organization relying on conventional and traditional methods of governance or risk management is unlikely to enjoy sustainable growth. Contrary to popular perception, effective risk management through governance and compliance activities can have a direct and significant impact on the organization’s growth. Read ahead for an overview of the importance of effective governance and risk mitigation for the modern business.
Significance of Governance, Risk and Compliances
Modern businesses are expected to balance profit motive with ethical strategies and policies. There is a growing realization that sustainable business operations require effective internal corporate governance. As the recent economic crisis showed, ignoring corporate governance invariably results in a situation where businesses suffer very harsh consequences of violating governance norms.
Risk management is important because each and every activity of the organization involves a certain amount of risk. Assessing risk, determining tolerance, and implementing suitable policies are traits shared by all successful businesses.
Compliances are essential because commercial organizations are just one of the many stakeholders in the modern economy. Government and regulatory bodies impose numerous restrictions designed to ensure short-term profit motive does not result in long-term damage to the economy and the society. Effective compliance is essential to avoid legal issues and disputes that can have a negative impact on the firm’s profits and goodwill.
Advantages of Effective Corporate Governance
Just as nations with strong and stable governance policies enjoy more respect, corporations with effective governance policies will automatically enjoy better credibility and goodwill in the market. A look at history of business over the past two centuries clearly shows that firms with poor corporate governance policies have, sooner or later, struggled to survive.
Effective governance, risk and compliance solutions create the framework that facilitates safe and sustainable growth in the future. It serves as a strong foundation that helps businesses face new challenges and convert them into opportunities.
Advantages of Good Risk Management
The conventional approach towards governance and risk management treated these concepts as static components of the business strategy. Today, risk management is treated as a process that requires constant fine-tuning and improvements. Every new change in its internal or external environment results in a change in the nature of risk faced by the organization. In such a scenario, an effective governance, risk and compliance model that versatile and agile will help the organization develop an effective risk management strategy.
Benefits of Strict Compliances
All commercial organizations rely on effective implementation of internal compliances to maintain internal control and maximize efficiency. External compliances imposed by the government or regulatory bodies play a significant role in the firm’s credibility in the market.
Tackling complicated requirements related to compliance has become a lot easier through availability of governance, risk& compliance software application. Cloud computing, big data analytics, and smarter software applications can help organizations convert a hitherto negative task into an activity that will lead to improved financial and operational benefits.
A stable GRC policy is essential for the survival and growth of any and every business. Using the latest IT tools and solutions will help reduce costs, improve effectiveness, and maximize benefits of good governance, risk control, and strict compliances.
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