Corporate Governance Issues: Common Challenges [And How to Overcome Them]

With digital transformation and the rise of big data, organizations are being pushed to implement robust governance practices. The sheer volume of data, new technologies, and changes is staggering, and it has created the need for moderation and strong governance. 

For businesses struggling to scale while keeping up with changes, it is time to rethink their governance strategies to extract value and scale effectively. Traditional approaches no longer suffice; businesses must adopt proactive governance management to formally manage their operations throughout the business lifecycle.

Corporate governance issues and solutions

Corporate governance helps business leaders ensure accountability, transparency, and ethical conduct. However, a growing number of companies face challenges like departmental silos, reduced bandwidth to meet compliance requirements, implementing privacy controls, and measuring the metrics to check if it works. 

Let’s understand these corporate governance failures in detail: 

Siloed systems 

Data and information silos exist in almost every type of organizational structure— cloud-hosted, on-premise, or hybrid. Silos prevent information from freely flowing within departments, creating accessibility barriers. Such decentralized business units create poor visibility into the risk and operation landscape. 

The answer to decentralized systems is consolidating cross-functional information into a single system. This allows users to collaborate effectively, prevents new silos from branching out, and streamlines decision-making processes.  

Regulatory compliance 

Regardless of your business domain, one or more regulations are compulsory. If you are a service provider, some data governance frameworks like ISO 27001 and GDPR may be necessary to unlock sales deals. Moreover, it is one of the critical principles of IT governance. 

If the regulatory body is the government, non-compliance would result in expensive legal proceedings. For voluntary regulations, you pay for non-compliance by losing out on sales opportunities. 

Managing regulatory requirements while balancing daily operations can be challenging, especially if you lack experience and expertise. Focusing on compliance activities eats up engineering bandwidth and adds to a growing pile of checklists. 

The solution to navigating these sharp corners is to use a compliance automation tool that integrates easily with your cloud setup to continuously monitor controls, identify risks, and collect evidence in real-time. 

Case Study: How Sprinto helped Kodif step up towards enterprise-readiness with compliance

AI governance

As business leaders continue to board the AI train, these innovations should not permeate the technical touch points of our lives without safeguards to prevent their misuse. These guardrails consist of measures and mechanisms around ethics that aim to protect customer privacy and trust. 

AI regulations are rapidly evolving to keep pace with the dynamic nature of its development. Implementing tight regulations around it requires a solid, risk based foundation that meets ethical concerns to ensure frictionless adaption. 

To add to the complexity, a growing number of AI frameworks are popping up at an unprecedented pace. Given that AI governance is different across the world, collaboration between private and public stakeholders is another challenge. 

To keep up with AI scrutiny, you must adopt robust risk management frameworks like NIST AI RMF 1.0. A risk compliance management software can help you automate the risk profiling and control implementation process. 

Security and privacy 

Security and privacy challenges are closely related to regulatory compliance. They include processing, storing, collecting, and transmitting customer data safely to prevent unauthorized users from accessing and misusing it. 

Examples of such data include PII (Personally Identifiable Information) or PHI (Protected Health Information). As data privacy concerns are increasing, so is the scrutiny around it. 

For example, if you collect PII of individuals residing in the European Union, compliance GDPR is mandatory to safeguard customer rights and privacy. If you collect and transfer health records, HIPAA ensures you have the right controls and processes in place to do so in a way that only individuals with certain privileges can access it. 

Implementing security and privacy controls is often complex, sometimes confusing, and always chaotic. The best way to manage and implement them is using tools that identify the gaps, assess the risks, and collect evidence of your corrective actions.

Measuring governance implementation metrics

Developing and implementing strong governance practices is half the job. The true challenge is understanding whether these practices effectively generate the intended outcomes. For example, if you introduce training and awareness programs to improve accountability and responsiveness, does this activity actually improve the rate of internal threats?

One way to measure the effectiveness of governance practices is to use GRC metrics that quantify the KPIs, KRIs, and KCIs. Continuing the example of training and awareness, a GRC metric measurement program would help you track the completion rate, risk reduction rate, and impact on compliance program progress. 

Contextualizing data

One of the pitfalls of having large volumes of data is contextualizing it. Most businesses are guilty of collecting information unnecessarily without planning ahead. This creates the problem of contextualizing – function heads struggle to identify which data is significant for governance and aligning it with regulatory requirements and business objectives. Ensuring data accuracy and timeliness while interpreting it in the context of compliance, risk, and performance goals adds another layer of difficulty. 

This problem is solved by GRC tools that contextualizes data by integrating information from various systems and mapping it to relevant governance, risk management, and compliance frameworks. This helps to identify risks, align it with policies and regulations, and generate actionable reports for decision-makers. 

Information management 

A hybrid or multiple cloud architecture consists of information deployed across all sources in the infrastructure. Without a structured system to organize, store, secure, transmit, and manage them, a number of challenges like poor visibility, security vulnerabilities, and managing changes arise. 

To solve for this, use a structured framework to organize, control, and monitor data across an organization. For example, a GRC framework ensures that information is handled in keeping with regulatory requirements and internal policies. This reduces the risk of data breaches and non-compliance. It centralized data management to facilitate easy tracking classification, and security. 

Policies and procedures 

Policies are the building blocks of a governance structure. These guidelines are developed around the practices relating to accountability, security safeguards, decision-making, stakeholder engagement, and ethics. 

Developing policies involves a long checklist of challenges, such as aligning policies to regulatory requirements, getting buy-in from all stakeholders, measuring their effectiveness, developing new policies to keep up with changing goals, and managing overlapping policies. 

However, the most challenging aspect of governance policies and processes is creating them from scratch, tracking every updated version, and mapping it to systems and people. 

You can simplify and automate policy management using a centralized platform that offers a pre-built library of customizable policies, automates policy to regulation mapping, and enables one-click acknowledgment. 

Sprinto offers a streamlined, dynamic approach to policy management that goes beyond one-time creation. Manage documents, acknowledgments, and compliance evidence quickly—within minutes, not months. Easily check compliance requirements and ensure proactive protection, all in a single, efficient process. Get a demo now. 

Productivity and priority

Juggling a myriad of initiatives while balancing priorities involves strategizing resource allocation and identifying the key areas of focus. Additionally, new changes in technologies and processes are continuously introduced to these existing workflows and systems. Unless managed efficiently, productivity takes a hit. 

Using a GRC framework is a widely adopted approach that helps you balance projects based on priority while maintaining productivity. It works by consolidating compliance requirements, organization wide risks, and governance activities in one place. GRC tools automates the workload associated with these activities while increasing visibility. 

You can expect a boost in overall productivity as employees can automate compliance tasks, manage information from a centralized dashboard to reduce multiple to and fros, and gain key insights to make better decisions. 

Training 

Employees and stakeholders alike should understand their responsibilities and accountability around ethics, security, and compliance. Some compliance frameworks have training in their checklist for certification. 

Developing and implementing training programs does not come without hurdles. It is within human nature to resist and display a general unwillingness to accept change and learn anything that’s not part of their daily roles. 

Another challenge is updating the training program to align with new changes and keeping track of who completed what. 

Given that this is non-negotiable, businesses must devise strategies to mark this off the checklist. To circumvent these challenges, use a training system that includes capabilities like tracking completion rates, compliance-specific materials, and capturing evidence of completion. 

Easily trigger training programs by specifying roles, content, and deadlines. With Sprinto’s role mapping, launch targeted training campaigns for relevant employees, track progress, and monitor control status—all in one platform. See Sprinto in action. 

Streamline your corporate governance issues with Sprinto

If you are struggling to keep up with corporate governance problems, ignoring them will snowball these challenges to the point of an avalanche. While there is no magical solution to erase your pain points, tools like Sprinto help you effectively manage them. You can:: 

• Use a pre-built library of fully customizable policy templates to launch a governance program with negligible manual effort
• Launch and track security training programs aligned to your compliance and security requirements
• Manage and monitor governance risks and interpret them with precision using a industry benchmarked scoring system
• Continuously and comprehensively monitor controls against selected frameworks and identify anomalous behavior in real-time
• Systemize and accelerate change management in a way that aligns with compliance requirements to enable frictionless changes on a code level

Contact us to learn how Sprinto can elevate your governance strategies.

Manage all governance challenges from one solution

In 2024, corporate governance faces a fresh wave of challenges that boards across industries must address. In the post-pandemic era, boards are grappling with heightened regulatory scrutiny and the growing role of artificial intelligence in decision-making, among other emerging issues. 

To solve these challenges, many businesses are adopting the automated approach to streamline compliance. An automated solution helps to manage complex regulatory requirements, reduce human error to zeros, minimize manual efforts to a negligible point, and ensure adhere to stringent governance practices. 

Stay Ahead with Automated Governance & Continuous Compliance. Get a demo now.

FAQs

What is the importance of corporate governance?

Corporate governance is crucial for ensuring transparency, accountability, and ethical behavior within an organization, building investor trust, mitigating risks, and promoting long-term sustainability. Strong governance frameworks guide decision-making, protect stakeholder interests, and enhance the organization’s reputation, ultimately driving its success and growth.

What are the 4 elements of corporate governance?

The four elements of corporate governance are:

• Accountability: Ensuring that the board and management are answerable to stakeholders.
• Transparency: Providing clear, accurate information to stakeholders.
• Fairness: Treating all stakeholders equitably.
• Responsibility: Ensuring ethical decision-making and compliance with laws and regulations.

What are the 7 principles of corporate governance?

The seven principles of corporate governance are:

1. Accountability: Boards are accountable to stakeholders.
2. Transparency: Clear disclosure of information.
3. Fairness: Equitable treatment of all stakeholders.
4. Responsibility: Ethical and legal compliance.
5. Risk Management: Identifying and mitigating risks.
6. Sustainability: Focusing on long-term success.
7. Integrity: Upholding ethical standards.