TechTalk Blog: Corporate Governance Breach Could Lead to Losses Topping $20 Billion This Year

By David Colgren posted 03-04-2015 06:42 PM

  

Very interesting CFO Magazine article on the growing crisis of corporate governance, risk breaches and the need for additional technologies to assist companies with the major financial liability issue…  "Despite such headlines, “corporate mistakes keep getting worse,” Forrester writes. “In 2015 we will see more of the same, and with even greater financial impact.” The research firm predicts that a single corporate risk event will lead to losses topping $20 billion this year."

Can companies (both large and small) afford to not have IT Risk Control Systems in place to deal with risk breaches?  The article outlines some recent corporate examples: 

“The Forrester report cites such corporate failings last year as the dozens of product recalls by General Motors that generated a $3.2 billion hit for vehicle repairs and compensation for accident victims. Johnson & Johnson reached settlements totaling $6.2 million for selling faulty hip implants and for misleading promotions of its drug Risperdal, and Pacific Gas & Electric agreed to pay $1.4 billion in fines related to its deadly 2010 pipeline explosion.” 

“The biggest corporate payouts were regulatory settlements by top banks, including Bank of America ($16.7 billion), JPMorgan Chase ($13 billion), and Citigroup ($7 billion). Then there was the $8.9 billion that BNP Paribas agreed to pay for pleading guilty to conspiring to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act. The financial institution processed billions of dollars of transactions through the U.S. financial system on behalf of Sudanese, Iranian and Cuban entities subject to U.S. economic sanctions.”   

CFO Magazine goes on:  “The shifting market suggests that companies should lobby vendors of the most critical business applications to instill Governance, Risk and Compliance (GRC) elements into their products. 

What do you think?  Is there a gap in technologies companies can use in the GRC marketplace and how can management accountants stay ahead of this growing corporate governance trend?

 

 



#financialtechnology #HotTopic #Compliance #Corporategovernance #accountingsoftware #GRC #riskmanagement #cfo
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03-11-2015 09:26 PM

Today I watched a presentation by Boardwalktech and MetricStream (GRC software provider) that had startling claims about the lack of critical spreadsheet governance. Firms of all sizes still rely heavily on Excel spreadsheets and other user-developed technology to produce financial reports and cannot show that they have strong management and control over these key pieces in the supply chain of financial reporting. Just wait until the SEC and PCAOB come down on auditors even more heavily - what does that mean to the auditees and investor relations should they get nailed by the regulators and auditors? Investor lawsuits a possibility? We management accountants as well as public have to gird our loins and do a better job with governance of all kinds, especially the "low-hanging fruit" of Excel spreadsheets. (Sorry, that's my soapbox speech.)