IT Compliance and Controls

Converging Business, Information, and Controls

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The Cost of Fragmented Responsibility and Accountability

June 3rd, 2008 · No Comments

Silos throughout an organization are natural as an organization is initially created due to the entrprenuerial situation where any one individual maintains a dozen or so roles.  As the organization grows however the organization must continually redefine and restructure the objectives and responsibilities of the staff.  This is especially important as the competitive landscape has increased, and the need to maintain shareholder confidence by providing proper control environments.  (The cost of NOT integrating these control environments is discussed here)  A study from Deloitte identified the following underlying risks and a contributing cause to the risk management meltdowns within the financial sectors:

“Good intentions are not enough to ensure a shift in operating culture. Clarity on who owns what process in an integrated governance and control architecture is therefore critical. It appears a prime source for the losses incurred by many major banks in the recent credit crunch was the inability of those institutions, in many instances, to link risk and control functions together.

Our research highlights fragmentation across major financial firms in who has responsibility for integrating governance, risk and control systems. Just 41 per cent of firms stated their audit committees or boards of directors have overall control of governance and controls. Less than half (47 per cent) have undertaken consolidation of governance and controls across borders and operational units in the past three years.”

Best,

James DeLuccia

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