CEO conversations today highlight a wave regulator interventions due to the recessionary stimulus role tagged on the financial services industry. In fact, some are finding a new propensity by regulators to overburden organizations with complex, costly rules, processes and,of course, audits. Every industry segment has to ensure a reasonableness, a balance in new requests, as well as evidence that they are realistic, proven demands versus knee-jerk applications which can deflect executives' attention away from the holistic business needs and the customer objective.
First, step back and evaluate your planning, control and reward systems that direct your business energy plus seriously assess your governance model and the Board makeup. Is your governance structure externally dynamic and internally vigilant with leading edge knowledge of strategic and performance issues? Regardless of the organization's size governance controls need to be independently assessed.
Second, differentiate between real regulations and auditors' personal standards. Regulations add costly burdens to the organization's business model. What is the need-solution equation? Challenge personal
rules which are duplications of current controls or do not support regulatory realities.
If your house is not in order and the governance function does not demonstrate the right needs for business
controls, you will attract additional regulator burdens. Also, appreciate the market and customer perceptions of your business performance, past and present. and the image they create for the public and regulators. Substantive, systemic risk controls are a necessity whereas intervention regulatory razzle can only increase operating costs and detract from the firm's profitability.
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