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The Decision Factor offers insightful comments and observations on analytics—from views on new technology approaches and market dynamics to the latest industry trends driving demand for faster, smarter information analysis. This blog contains personal views, thoughts, and opinions from SAP employees, mentors, and friends working in the area of analytics. It’s not endorsed by SAP nor does it constitute an official communication of SAP.

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What Should Auditors Audit?

monitoring risk and control

In the past, auditors were famous for finding problems. They audited a process, business unit, or location and found “weaknesses” in internal control. These were then prioritized based on the auditors’ assessment of the risk they represented.

These days, leading internal audit teams are moving from this idea of auditing controls, sometimes called controls assurance, to auditing whether management’s processes, systems, and organization (which include controls) provide reasonable assurance that risks are at acceptable levels.

They are moving from controls assurance to risk assurance.

They are also moving from auditing the past (hindsight) to providing insight on current activities and …

GRC and Golf: Games of Honor

golf ball lies at edge of hole

I was sitting in my backyard yesterday, which overlooks a golf course in Anthem, Arizona, and my mind was wandering as I thought about the topic for my next blog. Just for the fun of it, I thought about some key aspects of golf that might be applicable to governance, risk, and compliance. If you are a golfer, you’ve probably heard some of this before—but I’m guessing you’ve never heard this applied to GRC.

Perhaps the US Golf Association (USGA) says it best in an excerpt from The Human Element:

“Golf is …

Monitoring Risk and Control Deficiencies – Who’s Responsible?

Who’s responsible for ensuring that corrective actions to remedy issues identified by internal audit are completed?

Management is responsible for the system of internal control as well as for managing risk.Management is responsible for correcting deficiencies either in controls or in the management of risk, whoever identified them.

So why does internal audit, more often than not, monitor completion of these actions? Why should they be the ones that report progress to the audit committee and executive management?

Internal audit certainly has an interest in seeing these actions taken. Not only does it mean that their recommendations for change …

GRC Strategy Quadrant: Understanding Type D Risks

GRC Strategy Quadrant: Understanding Type D Risks

A Better Way to Classify Risks

There’s nothing new about classifying risks by category – strategic risk, operational risk, and so on. But I’m suggesting the strategy for managing risks is dramatically different for each section of the quadrant. And we make mistakes when we use a response strategy that doesn’t match the risk type.

In my previous blogs, I illustrated the GRC Strategy Quadrant, which classifies risks based on the risk “appetite” of the business and the perceived risk level, and I explained

Misunderstanding Risk and Controls

monitoring risk and control

Time and again I hear that risk management is seen as something that is required by the regulators, perhaps by the board or top management, but is not seen as something that helps individual managers succeed.

Time and again I hear that boards are not receiving the information they need to know whether the risks to the organization’s strategies are managed appropriately.

Time and again I hear of organizations that are satisfied (i.e., complacent) with the periodic management of a list of significant risks — as if risks are somehow less dynamic than the business environment.

Time and again I …

GRC Strategy Quadrant: Understanding Type C Risks

Misunderstanding Risk and Controls

A Better Way to Classify Risks

There’s nothing new about classifying risks by category – strategic risk, operational risk, and so on. But I’m suggesting the strategy for managing risks is dramatically different for each quadrant. And we make mistakes when we use a response strategy that doesn’t match the risk type.

In my previous blogs, I illustrated the GRC Strategy Quadrant, which classifies risks based on the risk “appetite” of the business and the perceived risk level, and I explained Type A and

GRC Strategy Quadrant: Understanding Type B Risks

GRC Strategy Quadrant: Understanding Type B Risks

In a recent blog, I illustrated a GRC Strategy Quadrant that I think can be used to tailor risk management strategies to different types of risks.

A Better Way To Classify Risks

There’s nothing new about classifying risks by category – strategic risk, operational risk, and so on. But I’m suggesting that the strategy for managing risks is dramatically different for each quadrant. And we make mistakes when we use a response strategy that doesn’t match the risk type.

In last week’s …

GRC Strategy Quadrant: Type A Risks Explained

GRC Strategy Quadrant: Type A Risks Explained

In a recent blog , I illustrated a GRC Strategy Quadrant that I think can be used to tailor risk management strategies to different types of risks.

A Better Way To Classify Risks

There’s nothing new about classifying risks by category—strategic risk, operational risk, and so on. But I’m suggesting that the strategy for managing risks is dramatically different for each quadrant.

The quadrant classifies risks based on the risk “appetite” of the business and the perceived risk level. I will illustrate my points over …

The New Breed of CFO and How to Become One Yourself

The New Breed of CFO and How to Become One Yourself

‘Stick close to your desks and never go to sea, And you all may be rulers of the Queen’s Navy’

The chorus of “Sir Joseph Porter’s Song” above, taken from the Gilbert and Sullivan operetta H. M. S. Pinafore, is a satire said to be based on William Henry Smith (1825-91), the Victorian businessman who made a fortune through expanding his father’s bookselling business into a national chain which still thrives today as WH Smith. Like many successful businessmen William entered Parliament in 1868 and was appointed First Lord of Admiralty in 1877, – equivalent to the American “Secretary of …

Risk-Driven, Governance Risk and Compliance Oversight

GRC Strategy Quadrant

Risk management continues to fall short of expectations. Surveys show boards and senior executives believe risk management is important, but also reflect an overwhelming dissatisfaction with the implementation initiatives.

Adopt a Value Driven Approach to Risk

Recently, in an attempt to make risk management more relevant and sustainable, I wrote a blog aimed at focusing risk management on value driving activities of the business (“Driving Value with Risk Management”). My belief is that too much risk management activity is spent on identifying and assessing …