The future of controls has been saved
The future of controls
Radical change: confidence, intelligence, performance.
Are today’s controls up to the job?
In short, the answer is no. In our rapidly transforming world, where consequences are far greater, controls are still not working. Despite all the investment and increasing requirements and regulations, controls are not prioritised, and largely focused on fi nancial reporting. The status quo is broken and a new approach required.
While increased challenges have caused some industries to
rethink their approach to operational risk and compliance-related controls,
others are playing catch-up.
Controls typically only become a priority for
organisations when they fail, resulting in increasing costs and a reactive
approach. Imagine if controls resulted in better decision-making. This would be
a game-changing step for business and would allow you to enable faster and more confident decisions.
Several developments have limited the effi ciency and effectiveness of controls:
- 1. Lack of common taxonomy (definition of terms),
resulting in an inability to apply a consistent approach to the measurement, execution and reporting of risks, controls and issues.
- Creation of controls in silos to address specific regulatory requirements or emerging risks, resulting in redundant and overlapping controls.
- Misalignment of controls with business and risk objectives, slowing the business down and providing a false sense of security.
- Limited leverage of technological or digital capabilities to increase efficiency and effectiveness of control aligned with digitisation of core processes.
- Lack of a coherent approach to monitoring and testing across three lines of defence, resulting in similar or comparable controls being evaluated multiple times.
- Limited utilisation of monitoring techniques and advanced predictive capabilities to assess eff ectiveness of control environment and sense emerging risks that might have oversized future impact.
- Lack of controls expertise in 1st line of defence, resulting in poor
control data quality.
Executives are increasingly exposed to risk—a new operating model and enhanced tech are vital to business confidence and will help boards achieve strategic goals. The old, manual and siloed control model and behaviour should end and a new approach to controls should be adopted.
Read our full report here.