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January 30, 2007
Compliance declining in importance
2007 year seems to be shaping up as the year that compliance measures decline in importance. One hopes that the resources freed up by this change are re-allocated to value-added risk management activity that better balances risk and rewards.
Imagine what a company could do with the resources currently being deployed on SOX; one could build predictive risk models, drive alignment of the risk appetite across the company, Seek new opportunities...in short, run the business better.
To whit, David Katz's just put out a great article from CFO.com points to the swing in the compliance pendulum:
One after another, the stars are lining up. Both the Securities and Exchange Commission and the Public Company Accounting Oversight Board beat retreats from bright-line strictures on internal-controls. Treasury Secretary Hank Paulson sets up a kitchen cabinet of deregulators in hopes of preventing the flight of U.S. public issuers. On the legal front, auditors mount a strong push for tort reform. Here, David Letterman style, are ten signals that rulemakers and politicians are in a distinctly deregulatory mood when it comes to matters of corporate finance:
10. Shareholders can't sue your auditors anymore.
9. Katie Couric seems underpaid.
8. The SEC is becoming a material girl.
7. Arlen Specter wants to protect your privacy.
6. Steve Jobs gets to keeps his job.
5. Internal controls doesn't keep you up at night.
4. Prosecutors get all mellow about attorney-client privilege.
3. Courtrooms are empty.
2. Hank Paulson applauds the retirements of Sarbanes and Oxley.
1. Enron, who?
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Posted by beaumontv at January 30, 2007 10:45 AM
You Wrote "2007 year seems to be shaping up as the year that compliance measures decline in importance. One hopes that the resources freed up by this change are re-allocated to value-added risk management activity that better balances risk and rewards."
That would be good however I fair compliance and risk might be adjacent disciplines, sox being pre-control and perhaps Basel (a parametric exercise) a post-control measurement, just following the line of thought through. The main point I am making is that this process of measurement works differently so what isn't compliant might actually not be risky and the instruments that compliance teams use then may not be that suitable for risk assessment. Really do compliance people want to build loss databases? Just a question and please don't mis understand me for building value-added risk management framework in my opinion leads the institution to form risk adjusted decisions and that is a worthy exercise.
Posted by: Martin Davies at May 11, 2007 10:40 AM
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