|For years, companies have invested heavily in governance, risk management and compliance (GRC), increasing the size, magnitude and reach of their GRC functions and activities. |
Now, in the aftermath of the most severe economic crisis in a generation, they are acutely conscious of the need to demonstrate sound risk management. They believe that their reputations, customer loyalty and even their credit rating and access to capital depend on it. Some reports suggest that financial institutions alone will spend up to US$100 billion globally on mitigating risk in 2010. Others indicate that US companies alone will invest US$29.8 billion over the same period.
As the trend towards massive expenditure in GRC continues, many companies fail to grasp, that their GRC investment, unless properly focused, is potentially being poured into a black hole and will not deliver the value investors and other key stakeholders demand.
The document 'The million-billion dollar black hole' (Ernst & Young) explores the reasons why companies are throwing excessive cash at GRC and identifies how they can make more targeted risk investments that reduce the cost of failure and deliver healthy returns.