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Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices by Anthony Tarantino

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CHAPTER 68

MEASURING THE EFFECTIVENESS AND PERFORMANCE OF YOUR GOVERNANCE, OPERATIONAL RISK, AND COMPLIANCE PROGRAMS

Scott L. Mitchell

Carole S. Switzer Esq.

68.1 TAKING A STEP BACK

68.2 PROGRAM EFFECTIVENESS

(a) Mandated Boundaries

(b) Voluntary Boundaries

(c) Conducting the Effectiveness Evaluation

68.3 BEYOND EFFECTIVENESS

68.4 TOTAL PROGRAM PERFORMANCE

68.5 PERFORMANCE MEASUREMENT BENEFITS

68.6 MEASUREMENT PRESENTS CHALLENGES

(a) Unintended Consequences

(b) Perception versus Fact

(c) Long-Term Results

(d) Prevention and Deterrence

(e) Multiple Contributors

(f) Inconsistent or Incompatible Information

68.7 MEASURING PROGRAM PERFORMANCE

(a) Business Objectives: Start with the End in Mind

(b) Identify and Align Program Outcomes/Objectives

(c) Define Indicators and Targets

(d) Measure Indicators

(i) Quality Data—How Imperative Is It?

(ii) Repeatable Approaches

(iii) Consistent Aggregation/Calculation

(e) Analyze Indicators

(f) Improve and Control Program Processes

(i) Effectiveness

(ii) Efficiency

(iii) Responsiveness

(g) Putting It All Together

(h) Candidate Indicators

NOTES

Managing operational risk in the current era of enforcement, shareholder suits, and explosive class action activity poses huge risks if you fail—and presents game-changing opportunities if you choose to embrace it.1 Over the past few years, organizations have focused a lot of time, energy, and resources on designing, implementing, and improving governance, operational risk, and compliance (GRC) programs to ...

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