Risk Management

Beyond the sheer costs of compliance, which we agree is substantial, is another and perhaps more critical factor – that of risk to the corporation and to top executives and Board members. Not being in compliance can lead to stiff personal penalties for executives. It can damage the firm's reputation and valuation. Major liabilities.

According to one industry white paper, "Fragmentation increases risk." If controls fail, there is a cascade of many serious consequences that fall upon the corporation and its management team that have far-reaching effects beyond the infractions themselves. The consequences are: Government agencies further scrutinize the company operations; major operations are disrupted; substantial amounts of executive time are spent trying to figure out what created the problem and how to fix it, business costs increase; customer service is impaired; fines are imposed; earnings need to be restated; company image suffers in the media, investor confidence is shaken; market confidence is reduced; and, ultimately, market performance is impacted across the board.