GRC adds value, providing competitive advantage
Most financial institutions have viewed GRC as discrete activities
undertaken by different departments with no coordinated efforts and as a
result, there is a lack of integration of GRC across business areas or
Deputy Governor General, Central Bank of Sri Lanka Dr Rani Jayamaha
said delivering the key note address at a seminar organized by John
Keels Business Solution Ltd on “GRC package and the roadmap for
financial service industry”.
She said that the three GRC imperatives; Governance, Risk management,
and Compliance are interrelated in financial business and the emerging
perception of GRC is that it is an integrated set of concepts.
When it is applied holistically within an organization, it can add
significant value and provide competitive advantage. Further, the
holistic approach would be more efficient, consistent and legally sound
and the Boards of Directors, senior management and staff at all levels
would be involved in the organization’s conduct of business.
She pointed out that now is the time to change and there should be a
multifaceted approach to face the GRC challenges.
“GRC should be treated as one package or a set and this approach
includes governance, built on Principles and Rules, Integrated Risk
Management Mechanisms to identify, assess and mitigate risks and a
defined compliance mechanism that deals with internal and external
compliance requirements,” She said.
Dr Jayamaha insisted that the financial institutions have the
responsibility to establish a compliance mindset throughout the
organization as a foundation that places high regard on ethics, trust
“Energies that are used by some banks and financial institutions to
design ways and means of flouting instructions and defying directives
should be diverted to observance of governance and compliance,” she
According to Dr Jayamaha in the present financial industry
environment, where the stakeholders and other interested parties put
pressure for greater transparency and corporate responsibility, the
Board of Directors and senior management have to set high standards in
all aspects of GRC.
The increase in investments to improve the IT infrastructure and
human resources to integrate GRC management can improve risk management
as well as compliance performance and its efficiencies.
The financial institutions that have strong governance and compliance
processes in an integrated GRC framework will be more capable of winning
public confidence, attracting investors, improving corporate reputation
and efficiency, as well as contributing to promote financial system
She said it is also important to note that markets and investors are
much more vigilant than banks and financial institutions themselves.
They may watch global events with bemusement or with justified suspicion
and feel that nothing is straightforward anymore.
“We need to reduce such feelings in the public in our country and
instill confidence in them. Given the severe impacts of the recent
sub-prime crisis and low quality credit decisions in the US and Europe
and large frauds in international banks, it is important that the
financial services industry and the regulatory community reflect on what
additional precautionary efforts should be initiated to ensure that Sri
Lanka’s financial services industry continues to function as a stable
and resilient one,” She said.