The governance process is essential for the success of an organisation. Without any governance, the organisation will not be able to provide its members with benefits and services. However, without having governance and with no policies and procedures to maintain, an organisation can become susceptible to problems that can lead to the downfall of the organisation. In this sense, the importance of governance, risk and compliance policy becomes very evident. There are many reasons for which an organisation needs both these policies and procedures.
It helps to reduce the risks and the threats that an organisation faces
To start with, the first benefit of governance risk and compliance policy is that it helps to reduce the risks and the threats that an organisation faces. This can be done by devising effective and appropriate policies. In addition to this, they also help to create a system of supervision over the activities of members and officers of the organisation. This system of supervision helps to ensure that the organisation’s performance meets the expectations of the stakeholders, and this can help it make improvements when it comes to problems that occur in the process of providing benefits and services.
Real-time assessment of risks is necessary for decision making
The second reason is that these two policy frameworks are extremely important. Without them, there can be no real-time assessment of risks, which is necessary for decision making. However, without proper governance risk and compliance, an organisation can easily be subject to pressures from external parties. This can lead to a decline in the productivity of the organisation and also bring down its reputation. Therefore, having a well-implemented governance risk and compliance policy is one of the most important aspects of an organisation.
They form a protective shield against any negative shocks to the company
The third reason is that there are several benefits of governance risk and compliance policy, and they form a protective shield against any negative shocks to the company. In fact, one of the most important aspects of a business is the health of its finances. If there is proper governance in place, then there is less chance of financial issues arising, and this will reduce the overall expenses of the organisation. This will also help in improving the cash flow and this can boost up the revenue cycle as well. Thus, there are several benefits of having a good governance risk and compliance policy in place. They form an effective framework of governance, which helps in the detection of risks, the development of solutions, the assessment of risks and their possible mitigation and also the collection of data on the status of risk.
It should be able to adjust with changing conditions
Since there are multiple drivers that can bring about changes in the profitability of the organisation, the governance risk and compliance policy should be able to adjust with changing conditions, and this is only possible if the policies are designed and developed in a flexible manner. This means that the policies must be modified, reviewed and modified as per the circumstances. Thus, the policy must be in place for the entire life cycle of the organisation or at least for the period during which it is going to be active. The policy will also have to be reviewed periodically, and the reasons for its modification, review and modification should be stated clearly.
It acts as a notification system in place
Another important point which cannot be overlooked is the importance of the policies and their timings. The organisation needs to have a notification system in place from the time the policy has been framed until the time it is modified or reviewed. The organisation needs to have a mechanism to notify its key stakeholders about the introduction of a new policy, which will, in turn, necessitate their immediate attention and participation in the approval and implementation of the new policy. It is very important to have a system in place for the purpose which provides for effective and timely communication regarding any major changes to the governance risk and compliance policy.
It helps in understanding the risks and analyses them adequately
In conclusion, a company cannot ignore the fact that there is a major risk involved with the introduction of governance risk and compliance policy in the organisation. However, the risks do not need to be extremely large, and therefore the company cannot take a relaxed view about the risks associated with it. The company needs to understand the risks and analyse them adequately in order to find options for mitigating them. This analysis is most effectively carried out with the aid of an expert risk manager from Clariba who can help the company determine the scope of the risk, the severity of the risk, the impact on various aspects of the business, and the ways in which the risk can be mitigated. Once the extent of the risk has been understood by the company, it can then devise ways in which it can address the risk, in terms of both internal methods as well as external methods.