Challenge balancing security checks and costs

Satyam has been big news for the last few days. Certainly the news has been disturbing and causes people to pause and think; as it should.

This certainly wasn't the first and unfortunately, is not ikely to be the last apparent corporate governance failing. In fact, in the last few weeks alone, we've had Wipro join the news and prior to that, the much bigger issue of Bernard Madoff.

To me, what this tells us is that rules alone are not sufficient. Demanding that people behave in a morally responsible manner is not sufficient on its own. Auditing corporate results is not sufficient on its own. Rather, we need a systemic set of checks and balances commensurate with the risks that we're exposed to.

In a simple analogy, keeping my doors locked and changing my keys if I sense a possible security breakdown, etc, are prudent measures to reduce the risk of a thief breaking into my house. However, while a higher degree of security is crucial, if I'm protecting nuclear secrets for example, it's seldom worth the cost to be 100 percent ensure that no thief can break into my house.

I suspect that finding that balance will be the real challenge for corporate regulators, company directors and all of us who are part of the global economic system.

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Michael Rehkopf

Michael has more than 20 years of experience in operations, strategy and sourcing covering all major parts of the globe. He has also worked for Australian, Canadian, German and Japanese companies in both business process outsourcing and IT outsourcing.
Michael's industry experience includes the financial services, manufacturing, telecommunications and travel sectors. He leverages this diverse industry experience and his university background in accounting, IT and his Master of Dispute Resolution, to assist clients in the development of business strategies and the implementation of sourcing strategies. These include the associated evaluation, negotiation and organizational change.
Michael is currently a partner at TPI, the world's oldest and largest sourcing advisory firm. Prior to joining TPI, Michael held leadership positions with Siemens Business Services, OpenPlus International, Mitsubishi Electric and Netron.