Expectations for transaction monitoring (TM) governance are quickly evolving due to the complexity of detection systems, the demand for additional operational oversight, increased regulatory scrutiny, and the need for an adequate control framework to guarantee proper risk management.
Many lessons were learned from the financial crisis. For example, if a chief executive ignores the warning signs posed by the risk management function, resists contrarian information suggesting the corporate strategy is either not working or losing relevance, or fails to consider critical risks when evaluating whether to enter a new market or consummate a complex acquisition, the shareholders and other constituents can end up paying a high price.
Country risk comprises the various risks of investing in a foreign country that can lead to either investment impairments or reductions in returns on investment (ROI). Investment impairments may arise from confiscatory actions by a sovereign (e.g., nationalization of the business or expropriation of assets). ROI reductions may arise from discriminatory actions by a sovereign directed to the company, a targeted industry (say, energy or banking) or companies from certain countries (e.g., additional taxation, price or production controls, exchange controls, currency manipulation, expansion controls, performance requirements and other regulations). Both may arise from destructive or disruptive acts by others (e.g., violence, terrorism, war, strikes, infrastructure deficiencies, kidnappings or physical phenomena). The primary objective of managing country risk is to protect company investments in foreign markets and sustain acceptable investment returns.
While strategy-setting defines an enterprise’s overall strategic direction, differentiating capabilities and required infrastructure, a business plan lays out how an organization intends to execute a strategy during an annual period or, if longer, the operating cycle.
The global business environment continues to evolve rapidly, creating opportunities and challenges for all types of organizations in virtually every industry and country. These organizations are reminded, all too frequently, that they operate in a risky world.
To provide perspectives about the nature of potential risks in 2013, Protiviti and North Carolina State University’s ERM Initiative partnered to survey more than 200 board members and C-suite executives to obtain their views about what risks they believe are likely to affect their organizations over the next 12 months. Among the key findings from our study:
- Executives are significantly concerned about the magnitude and severity of risks that could affect the achievement of profitability or funding goals over the next year
- Two risks stand out as being of the highest concern:
Concerns about the potential for regulatory changes and heightened regulatory scrutiny that will affect how products and services will be produced and delivered.
The report also discusses the surveyed organizations’ plans to improve their capabilities for managing these risks.
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Protiviti has published the second edition of its popular booklet, Guide to the Sarbanes-Oxley Act: IT Risks and Controls.
This publication is the definitive resource guide on IT risks and control issues related to compliance with SOX Section 404. This is a 45 page booklet covering an array of SOX-related topics in a questions and answers format.
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