Governance, Risk and Compliance blog

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Here are the

5 Steps of Digital Risk Management Process

.

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The risk management process has been in use for decades, but the introduction of risk management software has changed it.

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Staying compliant with a set of regulations and laws that keep changing is difficult, unless you have the right tools. Improving and enhancing your entire process for compliance, insights, monitoring, audits, performance, and decision making are just some of the benefits provided by the Regulatory Change Management software solution.

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What are the key strategies for an effective compliance Management

Compliance management is an important and crucial part for any organization since it ensures that are people are following given set rules and policies and procedures are being made in accordance with compliance standards or benchmark. Similarly, IT compliance is so important for any company regardless of its. If any system or internet connection is being installed in your organization that you should be having your company to be compliant with it and you need to make sure that the information you put is stored in most save and secured manner. This practice is just not good for your company but also for the clients and customers that you are having associated with your company are confident enough with the safety and security that your company provides for related to their information.

One of the things that every organization needs to make sure about compliance management system is in accordance with the guidelines and regulations within your organization as well as government or other authoritative entities. There are primary components that are attached to compliance management system. First is, technical control and second is administrative control. Each of these controls are very important for every organization for corporate management concerns for both who runs the business and for those who patronize them. But here what companies do that they get so much concerned and attached to the product development and running their business that they might often forget the important of the compliance management system into their organization. Here are the few basic strategies that if every company follows then would minimize the risk chances that may their company.

Evaluate the Needs

First what the management should need to do is to analyze the system and nature of the business according to that what kind of compliance management software or system they should be needing for implementing into the business. Evaluate compliance directive and risk based on the nature of business, product, service and market with which your company or business interacts. Before implanting a compliance management system into your organization, it is mandatory to evaluate the kind of risks that are attached to your business and conduct a compliance risk inventory and assessment. By the help of this practice, your company would know that what potential risk your company might face so that you can protect your company making strategies in accordance.

Establish a System

Not just for implementing a compliance management but for its operation you need to have participation from your managements since this task of managing compliance is not limited to one department, you have to have synchronization from other departments as well. For example, policies and procedure management, risk management, document management etc. all are needed to have establishment and coordination with the department and management of compliance. A strong commitment and bonding are necessary to have from upper management for and effective and fruitful compliance management system in your company.

  Market study

Having keen knowledge and study of the market is very important for compliance management. They are needed to have their selves updated with latest market trends and happening related to their business nature and sometimes not related to their business so that they also know what is currently going on in overall industries so that if needed they ca also adapt the other market trends as well which can also help them in somewhere too. Know best practices also know public comments and discussion about the compliance directives and risks that your company have already identified. It is not always important that you need to start from the scratch to implement the new system in company, but you can always identify and modify them according to the opinions that are widely discussed in in the public as well.

Training of Employees

Compliance training is always important not to educate their staff with the compliance management system but also to identify the risk and challenges batter and before the time arrives. It is not always essential to maximize employee’s compliance with laws, rules and regulations but also to minimize the risk of fines, litigation and adverse publicity due to non-compliance. Also, they should be knowing external sources like consultants, lawyers, regulators, solution providers not just who are attached to their company but also available in the market.

Ensure the Effectiveness

Management should ensure the effectiveness of compliance management system that is implemented in your organization. You can also support this argument by showing compliance audit function which identifies new, old or already changed compliance issues. By acting smartly and efficiently with your compliance management system you can also make sure complete transparency within your organization or business. By this practice, you can also identify, discover or resolve many hidden risks and also safe your organization skillfully from the unavoidable losses before time.

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What are the considerations while replacing your external auditor?

Replacing an audit firm or external auditor is as difficult and risky as switching your business. It can also come both as good news and bad news for a company f you’re lucky enough to find a good audit firm then there’s no need to worry about but if the story is other way around and you are not so lucky enough to find suitable and qualified auditor for your company then things may get worse which can harm the business as well. This kind of a decision requires a careful consideration but may come from learning through the past experiences of an audit firms their selves which can make even difficult decisions simpler. But here the question that arises is, why do companies feel a need to replace their already existing auditors? One of the main reasons that occur is due to heavy audit fees that firms charge. In a time of already debt era where companies and business are facing heavy recession and debts and then they also pay large fees to auditors, can also financially harm the business. It is indeed also true that everything comes with a price and if you’re going for some quality stuff then you have to pay good amount for it. But still, if searched well, anything can be found, which is similar case with the audit firms. If searched well, then good audit firms with less fees can also be found, and it also requires good negotiation skills. Other reasons may include rotation of partners, dissolution of audit firms, unqualified auditors, change in company’s policies and procedures etc.

Hike in Audit Fees

As discussed above, due to rise in audit fees, a company may need to switch its audit firm and go for a less and affordable auditors. Many well know companies have replaced their audit firms in past few years like PWC and Deloitte and research shows that most them are replaced by EY. Considering the rise in demand of auditors, audit firms have started increasing their amounts as well. But this can also become a risk to a company that if they are staking the quality of a services over fess the firms charge  because when companies go for less price then the chances are higher that the quality of service wont be there and also the qualification of auditors can also be an issue.

Rotation of Partners

Generally, all the large companies are made up of stake holders or joint partners which are normally rotational partners or management which is to be changed after every five year according to the legal laws and regulations. So, in this manner every company knows ever since the end of five years come that its about time that the few of the polices and procedures are to be changes due to new partners or stake holders. So, whatever they decide even in the case of selecting the audit firm internal audit software, it is their decision that what new audit company they want to come up with.

Advancement in Technology

Although the audit firms in recent times are up to date with the latest technologies and techniques like what tools and techniques are to be used considering the modern times. Organizations also prefer the audit firms that are fully equipped with modern technologies and most effective and efficient auditors who know what would be the best tools for what kind of audit and for what nature of business. Whereas, latest technology is important in this consideration, most qualified auditors with the sound knowledge of its usage in also mandatory.

Considering the Audit Firms Hiccups

Service hiccups occur when there’s any flaw from the audit firm on behalf of auditor. In recent research for past few months, analysis says that there had been plenty of service hiccups not from some ordinary audit firm but from well known and reputed audit firms, which shows that flaw can be occurred from any vendor or service providers regardless of their names. Service hiccups can occur from flaw in accounting practices, misreporting in financial statement reporting, false information, miscalculation for compliance and risk etc. But here, it is to be considered that company’s management and board should not necessarily terminate relationship with the audit firm or audit committees based on restatement or negative inspection, but audit committee should have a conversation with auditors regarding the mishap so that it can be resolved or understood in positive manner.

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Risk Management Process and Its Key Step

The systems and process which companies used to have back then for managing risk are now became outdated and ineffective this is the reason that risk management software is relative a new area specially in technology for organizations compare to what it was back then. Since it’s a new technology and process, every year it’s having some new update in its system and every year we get a need to update and educate our management s well with the new features of it. But if few steps are being followed then risk management system can be efficient enough then it was earlier. Risk management is difficult, but its of high importance specially in banking and financial sector. Risk, as it sounds itself that is of high importance and is a threat, risk doesn’t not need any definition because it’s a description in a name itself and if you tell someone about risk they will have an idea that some work is not doable and it should be stopped by now. People need to understand that risk is not something that you get from somewhere, it not contagious, but risk is inherent, it’s always available in system or your organization you just need to identify it, discover and see for the best possible solution to remove that risk.

 Risk Identification

You cannot resolve any issue if you don’t know the root cause or what is what?! Similarly, you can’t resolve the risk if you don’t know what risk is or what possible can go wrong. There are many ways to identify risk. First you need to know what kind of risk it is. There are four main categories of risk; hazard risk, operational risk, financial risk and strategic risk.

When any misfortunate event occurs like fire or injury, then it comes under a category of hazard risk. Operational risk occurs when any disrupt event occurs in business processes like turnover or supplier failure. Whereas financial risk, as it describes itself economic recession or risk related to company’s capital structure, financial transaction or any risk that is in monetary terms is financial risk. Last strategic risk, risk which includes new competitor and brand reputation and whenever company fails to plan that comes under strategic risk.

Now, organizations need to understand and identify that what category of risk are they facing then need to initiate to take possible actions accordingly.

 Identifying Alternative Solutions

Before even some risk occurs, company should be sufficient enough to know and to predict that what would be risks that might target a company and it should always prepare itself with alternative solution for it. When such risks occur that company have never predicted or facing without any strategy then risk management system and risk managers would be efficient and skilled enough that they cope with the risk as earliest as possible also they should come up with alternative solutions for it.

It is understood that every organization has an authority to remove, control, accept, avoid or transfer the risk they always know what sort of risk is affordable or effective. Here, accepting the risk means that knowing and accepting the fact that this risk is inherent, and organization has nothing to do or worry about that risk. To avoid a risk, mean that organization will simply not participate in that risk or that action. Risk control means that organization will identify, mitigate and come up with the best possible solution for it and will try best to control such potential risk that to not happen in future. Whereas, risk transfer means that the moment an organization faces or identifies risk, it will not bear neither control the risk, but they pass it on to insurance or risk service providers.

 To Evaluate Risk Results

Risk management is not project which once is done and then company thinks it gone and then forget about it. It’s a continuous and ongoing process which has faces and can always come back. The organization, its environment and its risks are always changing so its process can’t always be the same and also it should never be same since risk can occur in any of its faces and can target the system and organization. So, risk management should always be ready to face any sort of risk that might appear. Determining that the initiatives and process they are already having is still skillful and effective or there’s a need to change the process and a system now. Sometimes team have a need to start over whole process if the system becomes outdated or ineffective and start making new planning and they can also use available

GRC tools

for risk management instead of manually doing it.

[360factors]

Why Regulatory Change Management Plays Significant Role

Regulatory change management is one of the main components of GRC which is in its simplest definition defined as, ‘Managing regulatory, policy or procedure changes that apply to your organization for your industry.’ Its an on going process which does not need number of employees or long working hours but having one efficient and effective system will do wonders if implemented correctly and skillfully. It helps an organization to make policies and procedures and also notifies if there’s and change or update is needed to do for better performance of an organization. As its name defines its self that is ever changing process and always needs to an excellent monitoring so that system can identify itself what kind of change and in which department the change is needed. Regulatory change management has gained more importance in banking and financial industries since past decade. Banks and financial institutions being more concern to have most effective regulatory change management software so that they have better performance in their own industry. To ensure that banks are complying with the latest banking regulations, banks always needed to manage their regulatory change management. However, they need to be more flexible due to new banking regulations that are introduced. Regulatory change management plays a very significant role in every kind of a business that wants to sustain for long and work better in the industry. It has multiple of importance out of which few are discussed below.

 Awareness of Change

Organizations are always supposed to be proactive regarding market update related to their business. They immediately need to know if there’s any change or new trend that has happened or available in market which they are supposed to regulate in their company. They should go through it and understand what is needed to be done. This is the very first step in regulatory change management that organizations should be well aware regarding any change that is comping up. The change should be monitored at first and then it should be identified that what should be done to make that changes effective.

 Knowing the Change

Not all the changes that occur are mandatory to apply. But it is very important to notice and know every change that happens so that management can actually compare their previous positioning and changes with the latest one. Once new laws or regulations that have been announced, companies need to go through them and to understand what has changed and what impact would that make to their business. So, the very step would the comparison of the change because maybe there’s some section that has been added or removed but every change should be highlighted.

 What is Affecting

This is one of the most important and complicated parts of the whole regulatory change management process because once you have identified the change that is to be made then you should know what effects would that change causes to the whole system. Regulations affects the whole process and systems even if there’s a minor change, it can shake the whole organization. Every policy, procedure, document, structure etc. should be compliant with the system of regulatory change management so that if there’s any change ever, system should know what is affected by that change. This is a complicated process because every document, policy and procedure need to be mapped because only then organization would be able to understand what is affected by the change in regulation.

 Implementing the Changes

Implementing the changes is a crucial part for whole regulatory change management because if implemented wrong, its small single flaw can affect the whole organization. Regulatory change management team should be qualified enough to implement the regulatory compliance software and system to know what kind of system should be implemented and what changes would that system make to organization. If there’s a small change then it can be done easily, but if the change is big, then management should e skilled enough while implementing it. The whole organization needs to understand the regulatory changes that they are required to change and decide the best way to implement them.

 Risk Management

The most important role of regulatory change management is to map what is affected by the change and risk the factor which highly identified and calculated through regulatory compliance software. It helps management to evaluate the risk properly because there’s no need to investigate what is affected by the change, the system will do itself. There’s no need to monitor every individual risk if you have regulatory change management system in place.

[360factors]

What are the Considerations while Replacing your External Auditor?

Replacing an audit firm or external auditor is as difficult and risky as switching your business. It can also come both as good news and bad news for a company f you’re lucky enough to find a good audit firm then there’s no need to worry about but if the story is other way around and you are not so lucky enough to find suitable and qualified auditor for your company then things may get worse which can harm the business as well. This kind of a decision requires a careful consideration but may come from learning through the past experiences of an audit firms their selves which can make even difficult decisions simpler. But here the question that arises is, why do companies feel a need to replace their already existing auditors? One of the main reasons that occur is due to heavy audit fees that firms charge. In a time of already debt era where companies and business are facing heavy recession and debts and then they also pay large fees to auditors, can also financially harm the business. It is indeed also true that everything comes with a price and if you’re going for some quality stuff then you have to pay good amount for it. But still, if searched well, anything can be found, which is similar case with the audit firms. If searched well, then good audit firms with less fees can also be found, and it also requires good negotiation skills. Other reasons may include rotation of partners, dissolution of audit firms, unqualified auditors, change in company’s policies and procedures etc.

Hike in Audit Fees

As discussed above, due to rise in audit fees, a company may need to switch its audit firm and go for a less and affordable auditors. Many well know companies have replaced their audit firms in past few years like PWC and Deloitte and research shows that most them are replaced by EY. Considering the rise in demand of auditors, audit firms have started increasing their amounts as well. But this can also become a risk to a company that if they are staking the quality of a services over fess the firms charge  because when companies go for less price then the chances are higher that the quality of service wont be there and also the qualification of auditors can also be an issue.

Rotation of Partners

Generally, all the large companies are made up of stake holders or joint partners which are normally rotational partners or management which is to be changed after every five year according to the legal laws and regulations. So, in this manner every company knows ever since the end of five years come that its about time that the few of the polices and procedures are to be changes due to new partners or stake holders. So, whatever they decide even in the case of selecting the audit firm, it is their decision that what new audit company they want to come up with.

Advancement in Technology

Although the audit firms in recent times are up to date with the latest technologies and techniques like what tools and techniques are to be used considering the modern times. Organizations also prefer the audit firms that are fully equipped with modern technologies and most effective and efficient auditors who know what would be the best audit management tools for what kind of audit and for what nature of business. Whereas, latest technology is important in this consideration, most qualified auditors with the sound knowledge of its usage in also mandatory.

Considering the Audit Firms Hiccups

Service hiccups occur when there’s any flaw from the audit firm on behalf of auditor. In recent research for past few months, analysis says that there had been plenty of service hiccups not from some ordinary audit firm but from well known and reputed audit firms, which shows that flaw can be occurred from any vendor or service providers regardless of their names. Service hiccups can occur from flaw in accounting practices, misreporting in financial statement reporting, false information, miscalculation for compliance and risk etc. But here, it is to be considered that company’s management and board should not necessarily terminate relationship with the audit firm or audit committees based on restatement or negative inspection, but audit committee should have a conversation with auditors regarding the mishap so that it can be resolved or understood in positive manner.