Internal Control Management by Design

Business is complex. Exponential growth and change in regulations, globalization, distributed operations, changing processes, competitive velocity, business relationships, disruptive technology, and business data impedes organizations. Keeping complexity and change in sync is a significant challenge for boards, executives, as well as governance, risk management, and compliance (GRC) functions throughout the business. Business is no longer defined by traditional brick-and-mortar walls. Physical buildings and conventional employees no longer define organizations. The organization is an interconnected mesh of relationships and interactions that span business boundaries. Complexity grows as these interconnected relationships, processes, and systems nest themselves in intricacy. Distributed business operations complicates the organization as it attempts to remain competitive with shifting business strategy, technology, and processes while keeping current with changes in risk and regulatory environments around the world.

Managing control activities in disconnected silos leads the organization to inevitable failure. What may seem like an insignificant risk in one part of the organization may very well have a different appearance when other risks are factored. Organizations with siloed and manual processes for control management rely on a range of documents, spreadsheets, and emails that are inefficient, out-of-sync, ineffective, lack agility, and are inadequate to manage internal controls. Reactive, document-centric, and manual processes fail to actively manage controls in the context of business strategy and performance, and leave the organization blind to intricate relationships of risk across the business. Organizations fail and are encumbered by unnecessary complexity because they manage controls around specific issues, without regard for a common integrated strategy and architecture.

Organizations are tasked to provide an integrated view of internal controls across finance, IT, and business processes and operations. A scope that provides a single internal control management function that coordinates and manages controls across operations and finance. This is what is covered in my Internal Control Management by Design workshops.

At the recent workshops in Washington D.C. and Houston (which were fully booked), the attendees interacted in breakout sessions on the challenges they are facing in internal control management. Their specific issues and challenges are:

  • Providing an integrated strategy and view of financial and operational controls across the organization.
  • Increasing confidence in risk coverage and the complexity of interconnectedness of risk and controls
  • Capturing business changes with updated and changing controls
  • Combining finance and operational control teams and revamping processes
  • Focusing on key controls that could cause the organization to overlook other controls
  • Managing the human element in controls management
  • Expanding regulatory requirements for internal control management such as GDPR, FPCA, PCAOB pressures
  • Addressing a lack of resources while being tasked with more internal control responsibilities across operational controls
  • Keeping controls aligned with business processes and a changing environment
  • Implementing a system/technology to manage ALL controls across the organization
  • Integrating controls into daily workflow particularly when transitions occur with staff and turnover

Controls are critical throughout business strategies, operations, and processes. Internal control management has become a critical foundation for enterprise GRC. The correct controls that are operationally effective are the linchpin to assure that the organization can reliably achieve objectives while addressing uncertainty and acting with integrity (OCEG definition of GRC). As organizations mature their approach to internal control management they are seeing more intersections with risk, compliance, and audit processes which require a more thorough strategy for managing controls in the context of the organization.

Reactive and stovepiped approaches to internal controls management leave the organization not seeing the big picture of how controls interrelate with each other, risks, and compliance obligations. This means the organization wastes resources on managing controls as separate assessments and projects instead of as an integrated whole. Defining strategy, managing operations, and addressing organization change requires agility in internal control management to provide assurance to boards, executives, GRC professionals, as well as the line of business. As business becomes increasingly complex in a changing business and risk environment – that struggles with growing regulations, globalization, and distributed operations – organizations need a blueprint for effective, efficient and agile internal control management. This requires organizations to design internal management into the organization as an integrated part of strategy and operations supported by an integrated internal control information architecture that allows organizations to have a 360° situational awareness of internal controls in context of business strategy and operations.

GRC 20/20’s Internal Control Management by Design workshop provides a blueprint for attendees on effective internal control management strategies in a dynamic business and risk environment. Attendees learn and collaborate/interact on internal control management strategies and techniques that can be applied across the organization and as part of broader GRC strategies. Learning is done through lectures, collaboration with peers, and workshop tasks.

Upcoming By Design Workshops include:

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