Regulations are growing faster than the GDP
Regulations are growing faster than the GDP. In fact, in a world of economic
decline, it is the fastest growing industry. The rate of increase
exceeds the capability of heavily
regulated industries to integrate them into their environment; leaving these businesses and their management vulnerable to fines, censure
or worse. It becomes
more and more clear that ‘business as usual’ is cancelled. Old recipes don’t work anymore. The business operating
system is coming
to a grinding halt.
What is needed is a new perspective, a systemic perspective that looks at root causes of not being able to install and maintain a coherent governance, risk and compliance ecosystem.
It is all about Meaning
An important root cause for the
disproportional burden of compliance organizations are struggling
with is the inefficient way they deal with ‘Meaning’. In the
Governance Risk and Compliance domain ‘Meaning’ tells us ‘What’ we have to
do, ‘How’, ‘Why’ and ‘When’ in a specific situation. It is the connecting element between regulatory
prudence (setting rules
to achieve or prevent
something) , business motivation (strategy, objectives,risk tolerance, policies, performance targets), operation (executed policies, transaction decisions, performance results)
and evaluation (oversight, assessment, reporting, mitigation). ‘Meaning’ is more than simple rules. Every obligation forced upon us means
something in the specific context
of a transaction, a case, a
product or a customer. Every decision in a customer and employee
interaction is taken via an interpretation of the meaning
of specific rules and objectives, and of
the context at hand.
Managing Meaning
Meaning is
the Semantic Sweet Spot of every knowledge intensive organization.
Managing ’Meaning’ is managing the heartbeat
of your organization, preventing your business to collapse
as the consequence of a severe
corporate heart condition. Therefore, you have to become an Entrepreneur of
meaning and lever the Semantic Sweet Spot of your business operating system.
Traditionally, organizations deal with
meaning in a fragmented and not
well
coordinated way. Look for in- stance at the process of introduction
of
a new regulation. There are numerous points of interpretation, decision making, transfer, translation and evaluation in which
the meaning of regulatory and business requirements is lost or becomes eroded. Businesses are hardly able to grasp anymore the inter-dependencies between regulations and their relation to the internal policies. Dependencies are overlooked and anomalies
surfaced only after high-risk decisions have been taken.
Monitoring, oversight and compliance comprises
a reverse look at transactions to determine if an infringement has occurred. This means large,
tiresome and ineffective audits that do not solve the problem at its source
but instead identifies culprits.
The result is a vicious spiral
of frustration and demotivation, stakeholder irritation
and considerable financial loss.
Entrepreneur of meaning
Becoming an
Entrepreneur of meaning is possible
by establishing an end-to-end process in which the
connecting thread is the meaning of
regulations and objectives. This thread
connects the corporate intentions and obligations to the
outcome;
all the way. From risk assessment
and policy setting
to operational controls, procedures and decision making. From monitoring, auditing and reporting
to assessment,
recommendation and remediation. From training and certification to interpretation of a case in context, collaborating, following best practices and adhering to the
code
of conduct. The result is a virtuous spiral of better decisions, engagement, resilience and profit from new opportunities.
NB: This article is also published on LinkedIn.