'Governance', 'Risk Management' and 'Compliance' (GRC) have become important concepts for internationally operating companies. Especially with recent political developments and unlawful acts such as money laundering and sanctions violations. Management (including shareholders, investors and policy makers) has a responsibility to ensure this.
GRC work is critical to ensuring compliance with legal standards and regulations. This protects your company from unsafe and unethical actions. Lexsu consultancy can help you improve these points.
Prof. Geoffrey Parsons Miller of New York University Law School clearly defines these concepts in the Aspen Casebook Series: The Law of Governance, Risk Management and Compliance.
"Governance refers to the processes by which decisions related to risk management and compliance are made within an organization" (Miller, 2017, p. 31).
The term governance refers to the approach and manner of governance, the code of conduct and its oversight. Often complex with varying layers of responsibility, various departments or offices and service relationships. Thus, the formal structure, according to the organizational chart, does not always correspond in reality to the informal structure and distribution of power or influence.
The ultimate goal of governance is to establish and clarify policies that enable eficient and inclusive functioning within the organization. In other words, it ensures the interrelationships between diverse roles such as directors, shareholders and other stakeholders.
"Risk managament refers to the processes by which risk is identiﬁed, analyzed, incorporated into strategic planning and either mitigated through risk management and risk mitigation tactics or accepted as incidental to activities the organization intends to perform" (Miller, 2017, p. 32).
With risk management, you identify risks in advance and your organization can quickly anticipate them. As a result, you avoid financial or legal consequences. It also provides an opportunity to capitalize on potential profitable future opportunities. The goal of risk management lies not in eliminating risks, but the awareness that current business activities involve various consequences that affect the success and mission of the organization.
"Compliance refers to the processes by which an organization monitors its own behavior to ensure that it complies with applicable regulations" (Miller, 2017, p. 32).
In the context of GRC, however, the term compliance has a specific meaning. For example, it refers to the pocesses by which an organization seeks to ensure that its employees and other stakeholders comply with applicable standards and rules. These can be requirements applicable laws and regulations, also adherence to internal rules of conduct belong to compliance explains Prof. Geoffrey Parsons Miller in his elaboration of the terms.
Lexsu Consultancy is happy to support you in the GRC activities listed below:
It is important to understand that governance, risk management and compliance overlap and are intertwined, with each having legal elements. Consider new regulations in the international marketplace, court rulings or board decisions. Engaging a lawyer and/or legal consulting firm is a valuable addition for GRC.
Lexsu Consultancy has a partnership with RegulusCORE in the area of GRC. We are an International team of experts, bankers, engineers and lawyers in senior management positions who each specialize in various areas of law by country.
Miller, G. P. (2017). Introduction. In The law of governance, risk management and compliance (pp. 30-39). Wolters Kluwer Publishing, New York.
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