Who's in charge here?

Nearly half of companies don't have full clarity about who in their organisations is in charge of governance, risk and compliance (GRC), according to a survey The Convergence Challenge by KPMG International and the Economist Intelligence Unit which examines how organisations are converging their GRC activities to reduce overall business complexity and their exposure to risk.

Key points:

•The key driving forces behind the convergence push are executive management (56 per cent) and regulators (45%). Only 17% cited non-executive directors as the key driving force - a surprising finding considering how crucial it is for them to have a complete overview of risk in their organisation.

•Half of respondents estimate that governance, risk and compliance convergence activities cost as much as five per cent of their total annual revenues, while 77% expect it to increase over the next two years. This figure rises in the financial services sector to 88%.

•The key benefit of GRC convergence for respondents was the ability to identify and manage risks more quickly (59%); while only 39% of respondents said improved performance.

Simon Evans, KPMG director in the UK, comments: "Converging governance, risk and compliance activities and structures should be a real priority for corporates. But in our experience, business leaders have often taken a 'bolt-on' and siloed approach to dealing with new regulatory requirements and other initiatives as they emerge. Increased complexity and inefficiencies are the inevitable consequences.

"Direction needs to come right from the top - at CEO or CFO level. In today's environment, convergence of GRC is too important a subject for any ambiguity to be tolerated. Without clear direction and accountability, businesses can be left exposed to a variety of risks."

Against this backdrop, the survey found that companies do appear keen to rationalise the various strands of GRC activity, but only 11% of respondents have so far managed to do so.

Clearly many respondents agree that GRC convergence is a priority, but the task itself is seen as a challenging one with 45%of respondents finding it difficult to build a business case for greater convergence. While only 26% of respondents believe that convergence will help to bring down associated costs; and only a third, see GRC expenditure as an investment rather than a cost.

Simon Evans concludes: "GRC convergence can be a way of reducing complexity, clarifying accountability and improving efficiency within a business but it can also be a tool for providing management with information which, in turn, can improve performance and decision making across the organisation. Convincing businesses to see the performance benefits of such a convergence programme remains a key challenge."