Governance, Risk Management, and Compliance It Can't Happen to Us--Avoiding Corporate Disaster While Driving Success

by Steinberg, Richard M.

• ISBN13: 9781118024300
• ISBN10: 1118024303
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-08-02
• Publisher: Wiley

Summary

Companies successful over the long term create and nurture an environment for success. They foster a culture, leadership process and infrastructure that enable and support effective strategy implementation driving toward achieving business objectives and related growth, profit and return goals. Underlying success is a culture founded in integrity and ethical values that influences and pervades the entirety of the organization. Leadership emanates from a well-comprised board of directors effectively carrying out its oversight responsibilities with a great working relationship with the CEO and senior management. And management has embedded within the organization highly effective risk management, control, compliance and communication processes critical to providing information where needed and making quality business judgments and decisions driving towards success. This book shows corporate leadership (including board members) how to ensure that their strategic plans incorporate the necessary processes, organization, and technology to get to the companies goals. This book examines areas such as compliance, risk management, executive compensation, succession planning, crisis planning, board composition, and shareholder communications.

Author Biography

RICHARD M. STEINBERG is founder and CEO of Steinberg Governance Advisors, Inc. He is a nationally recognized expert on governance, risk, and control, and advises boards of directors of major multinational, large, and middle-market companies. He is a former senior partner of PricewaterhouseCoopers (PwC) and the leader of its corporate governance advisory practice. As an expert in internal control and risk management, Steinberg served as the lead project partner in developing the Committee of Sponsoring Organizations of the Treadway Commission's (COSO's) Internal Control—Integrated Framework, and led development of COSO's Enterprise Risk Management—Integrated Framework, the landmark reports recognized as standards for effective internal control and risk management. He has been featured on CNBC's Morning Call and Bloomberg TV's Bloomberg on the Markets and The Bloomberg Report; has guest-lectured at leading business schools including Columbia, MIT, and NYU; has been quoted in publications such as BusinessWeek, Fortune, the Wall Street Journal, Dow Jones MarketWatch, CNN Money, and the Financial Times; and is a monthly columnist for Compliance Week.

Table of Contents

Foreword	p. xiii
Preface	p. xix
Acknowledgments	p. xxiii
What Is GRC, and Why Does It Matter?	p. 1
What Is GRC?	p. 2
Why GRC Matters	p. 3
Culture, the Critical Driver	p. 5
What Is Culture?	p. 5
More Cultural Failures	p. 6
Companies That Got It Right	p. 8
Being Legal, Honest, Candid, and …	p. 10
Integrity versus Spin	p. 13
Speaking the Same Language	p. 16
Cost-Effective Compliance Programs	p. 21
The Back-Breaking Costs	p. 22
Beyond the Direct Costs	p. 24
Major Mistakes at Platinum-Branded Companies	p. 24
How Companies Got Where They Are	p. 30
Keys to Getting It Right	p. 31
The Compliance Office	p. 36
Making It Happen	p. 38
The Rewards	p. 39
Ethics Programs: Another Foundational Block	p. 41
Tone at the Top	p. 42
Problems at Daimler	p. 42
Elements of an Ethics Program	p. 43
Setting the Tone at the Top: Hewlett-Packard	p. 51
Risk Management and the Financial System's Near Meltdown	p. 59
What Went So Terribly Wrong	p. 59
The Regulatory System	p. 63
Merrill Lynch	p. 65
Where Were the Boards?	p. 68
Did CEOs See It Coming?	p. 70
What Is Risk Management About?	p. 75
Risk	p. 76
Risk Management	p. 79
Enterprise Risk Management	p. 80
Is It Really Worth the Effort?	p. 85
ERM Application Techniques	p. 88
Key Risk Indicators	p. 91
BP	p. 92
Implementing ERM	p. 99
Drivers for ERM	p. 99
Pitfalls	p. 102
Effective Implementation	p. 106
Roles and Responsibilities	p. 114
Does Internal Control Really Matter?	p. 119
Impact of SOX 404 on Financial Reporting	p. 122
Responsibility for SOX 404	p. 124
Other Relevant SOX Provisions	p. 126
Do Effective Financial Reporting Controls Really Prevent Fraudulent Financial Reporting?	p. 127
Real Life in the C-Suite	p. 130
Control over Operational Performance	p. 133
IT Controls	p. 134
Société Générale	p. 135
Washington Mutual	p. 139
Countrywide Financial Corporation	p. 143
The Foreclosure Fiasco	p. 144
Boards of Directors' Focus	p. 153
A Focus on the Rules	p. 155
Truly Effective Boards	p. 156
A Public Watchdog?	p. 158
Societal Responsibility	p. 160
Potential Pitfalls	p. 163
Overseeing Strategy and Risk Management	p. 169
Strategy	p. 169
Risk Management	p. 173
CEO Compensation, Succession Planning, and Crisis Management	p. 185
CEO Compensation	p. 185
Succession Planning	p. 192
Crisis Management	p. 196
Performance Measurement and Reporting	p. 201
Performance Measures	p. 201
Financial Reporting	p. 205
Building an Effective Board	p. 219
Looking Objectively	p. 220
A Shift in Direction	p. 221
Building a Better Board	p. 223
Board Assessments	p. 226
Bottom Line	p. 230
Avoiding Board Pitfalls	p. 231
Following the Herd	p. 231
Obtaining Critical Information	p. 238
A Leaky HP Board	p. 245
Another Leak-What Was He Thinking?	p. 249
Where the Power Lies	p. 251
A Tug of War	p. 252
Shareholder Activism	p. 252
Recent Achievements	p. 253
Dodd-Frank's Proxy Access	p. 256
Where to Draw the Line	p. 261
Finding the Right Balance	p. 262
Where We Need to Evolve	p. 264
Structural Issues at the Board	p. 265
Combined versus Separate Chairman and CEO	p. 265
Empowering CEOs in a Shifting Landscape	p. 271
Director Compensation	p. 274
Looking to the Future	p. 281
New Models for Board Governance	p. 281
A Healthy Governance Environment	p. 285
Boards' Perspectives on Risk	p. 289
Grasping the Holy Grail of Governance	p. 290
What the Future Holds	p. 293
About the Author	p. 299
Index	p. 301
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