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Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success by Richard M. Steinberg

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Why GRC Matters

As you look over the following chapters, you should get a good sense of exactly why GRC matters to every organization. Let it suffice here to highlight a few key points.

A critical element of GRC is a company's culture, including the oft-used term tone at the top. Inherent in culture is the extent to which a company and its people embrace integrity and ethical values. Why is this important, especially so in today's environment? Because companies operating from a base of integrity and ethics not only stay out of trouble, they build on that foundation to drive success. Such companies attract the best people to their organizations, as well as the most desirable customers, suppliers, financiers, and business partners. And the opposite is also the case.

No, we've not seen empirical evidence put forth in academic studies, but we do see anecdotal evidence. Take Johnson & Johnson, for example. Back in the 1980s when the Tylenol scandal hit, J&J's culture of integrity and ethics drove a quick decision—to pull every last unit of Tylenol off drugstore shelves. The action was costly, but it positioned the company extremely well in the consumer marketplace, providing tangible dividends for decades to come. But the recent travails of J&J have been quite different. When Tylenol, Motrin, and other products of its McNeil Consumer Healthcare Products unit were found to make people sick, the company was accused of failing to report and investigate the matter, and its reputation has ...

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