King IV: Compliance is the new license to operate
Companies doing business around the world should get their corporate governance policies in order, says French Caldwell, Chief Evangelist at MetricStream, a market leader in Governance, Risk, and Compliance (GRC) apps and solutions. Caldwell goes on to say that as regulation around anti-corruption becomes more stringently enforced, companies in Africa need to be more responsive to the needs of their shareholders and the public.
South Africa has been a bellwether for corporate compliance around the world, and the King Reports are considered the gold standard when benchmarking global corporate governance standards. The latest report, currently open for public comment, is more principle- and outcomes-based, instead of rules-based with a focus on remuneration.
And the spotlight is not only on South Africa. Compliance in Africa, sometimes in places where corruption has been business as usual, is also becoming par for the course. Significant developments have come out of Brazil, India and Nigeria where corruption has previously been business as usual.
Caldwell predicts that in much the same way principles of King III and IV became the benchmark for governance, King IV will have an impact on areas like risk management. King IV introduces the concept of combined assurance, extending the three lines of defense, governance, risk and compliance to include stronger reporting structures and enabling controlled environments for better decision-making.
Companies with gold-standard governance also need a social license to operate. While corporations have always been inherently accountable to shareholders by definition, they now need to pay close attention to societal trends and needs to ensure ethical and acceptable behavior.
Compliance, not CSR, is the new license to operate, CSR is what you do beyond the rules and regulations, says Caldwell. Companies who do not pay attention to the foundation of governance run the risk of losing their social license.
Good governance, says Caldwell, starts with optimizing, not implementing and maintaining. He says that he encounters corporations at varying stages of maturity in terms of compliance. He advises his customers that while technology streamlines the compliance process, it can only be optimized with effective change management to reap the full benefits and effectively manage compliance for risk averse business practice.
MetricStream is the market leader in enterprise-wide Governance, Risk, Compliance (GRC) and Quality Management Solutions. MetricStream solutions are used by leading global corporations in diverse industries such as Financial Services, Healthcare, Life Sciences, Energy and Utilities, Food, Retail, CPG, Government, Hi-Tech and Manufacturing to manage their risk management programs, quality management processes, regulatory and industry-mandated compliance and other corporate governance initiatives. MetricStream is headquartered in Palo Alto, California, USA (www.metricstream.com)
Notes to Editor
About French Caldwell
As an academic, French served as a Federal Executive Fellow at the Brookings Institution, an Adjunct Fellow at the Center for Strategic and International Studies, and an Adjunct Professor and Graduate Research Advisor at the George Washington University School of Engineering Management. He has written a book on international law, and has over 400 published research papers. French has a MA in International Economics, Strategy and Diplomacy, and a BS in Oceanography.
By French Caldwell, Chief Evangelist, Metricstream