All the legal experts reading this know these words by heart. But for the uninitiated, let me simplify these concepts.
Assume G, R, and C are my closest friends. G is the wisest. It takes all the big decisions. It sees that everyone gets what they are entitled to. R is the most daring one. But also knows how to walk the tightrope. C is a bit boring: always cautious but never gets us into trouble.
Now going back to the corporate world, they help us in all audits and compliance procedures. They are β Governance, Risk Management and Compliance.
Governance: The Pillar of Accountability
Governance refers to the structures and processes designed to ensure accountability, fairness, and transparency within an organization. Effective governance creates an environment where employees feel empowered, and behaviors and resources are controlled and well-coordinated. But what if thereβs no corporate governance? During such times we see examples like Satyam, Yes Bank and IL&FS, where the management or board of directors failed to adhere to ethical and legal standards.
Risk Management: Preparing for the Worst
Risk Management involves identifying, assessing, and mitigating risks that could potentially impact business objectives. It is like looking into the future and preparing for the worst storm. A recent example of a risk management failure is Silicon Valley Bank. It had a good credit rating but failed to assess interest rate risk.
Compliance: Adhering to Standards
Compliance means adhering to rules, policies, standards, and laws. It starts with identifying all areas where companies need to follow laws or best practices. It also prepares, communicates and delegates internal policies. Recently, RBI found a series of compliance failures with NBFCs and fintech players in India. That included breaches in Know Your Customer (KYC) norms, money laundering, reporting frauds, digital lending guidelines, connected lending norms, data security, and privacy regulations.
The Importance of a Well-Designed GRC Framework
A well-designed GRC framework can help organizations avoid such issues. It ensures that governance structures are robust, risks are managed proactively, and compliance is maintained across all operations. This not only helps in passing audits with flying colours but also builds a resilient and trustworthy organisation.
Feel free to reach out in case of any queries about GRC.
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Comments (1)
Achieving Success in Fintech with GRC – Preeti Chhabriasays:
October 21, 2024 at 1:43 pm[…] Clearly, thereβs more to success than just top-notch technology. Companies must also focus on effective Governance, Risk Management, and Compliance (GRC) to succeed today. In the last article, I introduced you to my best friends G, R, and C. If you missed it, hereβs the link. […]