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GRC Professional : GRC Autumn 2013
16 GRC Professional • Autumn 2013 COVER STORY ACI SAYS: For experienced GRC professionals, all of this probably looks like a typical industry shake up, albeit a headline grabbing and somewhat sentimental example that was a long time coming. While the media has been mainlining the public "How could they cheat?" incredulity, those who work in businesses in highly competitive industries -- where the dominating culture is about results (and we don't care how you get them)--would instead be asking how it took so long for everyone to take off their rose-tinted glasses. With the high level of dollars in sports these days, this outcome would have almost been expected by those experienced with the risks associated with allowing individuals access to that kind of potential income, without governance structures in place. What is surprising for many is why the people paying the dollars didn't insist on these structures much earlier. It appears that sport is not exempt from the same risks as other business activities. It is a dangerous combination when the incentive for bending the rules increases at a rapid rate, along with technological changes that advance far faster than the methods for monitoring their use can, and the risk management systems (if there were any) are not keeping up. Controls for doping, for insta nce a re well behind the advances in drug-enhanced performance. For organisations associating them selves with sports then, there are several lessons. Funding bodies, sponsors and those running the various sports need to not only look at governance str uctures they should perhaps have had in place some time ago, but sophisticated methods of cha nge and culture management; more proactive and adaptable controls; and a robust risk management reporting system that alerts them in advance of the emerging risks and not just those they might have known about 12 or more months ago. Reputations of more than just the players themselves are on the line. A vast, interactive web of organisations, individuals and industries thrive off sports worldwide. If you are a sponsor or funding body for sports at the moment, you may be feeling very wary of continuing or increa sing your involvement. And it is not as though sponsors have not considered the possible reputational implications in the past, but their ability or desire to conduct due diligence and assurance about the ways the sports or sports athletes will govern and manage meeting these expectations is poor. Add to the mix of potential reputational damage by association, you would also need to assess the risks associated with the gossip mill of social media. You can begin to see the impossibility of damage control if you don't have some kind of supervisory role with these relationships and a proactive risk management strategy for those risks that may be outside your direct control. In the wake of the ACA report, the Australian Sports Commission (ASC) released new governance principles on March 12 for the sports it funds. Not surprisingly, the first remedy is a threat to withdraw funding if new mandatory gover nance principles a re not implemented within a year. Sports targeted receive more than $5 million each a year. Swimming, cycling, athletics, sailing, rowing, hockey a nd basketball a re singled out for possible financial sanctions of up to 20 per cent of their funding because they are the biggest recipients of that money and are considered the most significant contributors to Australia's sporting success. The Federal Government said it would double financial resources to almost $13 million annually for the Australian Sports Anti-Doping Authority (ASADA) and law enforcement agencies to enable full and unhindered investigation of doping and other unethical behaviour, with civil penalties for athletes who did not co-operate. The ASC's governance principles are focused on three key areas: • The structural model of national sporting orga nisation s. • The composition of boards and how they operate. • Transparency, reporting mechanisms and the integrity of the sport. Boards of national sporting organisations will also be required to better supervise science practices, an area that came in for sharp scrutiny and criticism in the ACA report. When announcing the principles, ASC Chair, John Wylie said: "While good governance does not guarantee success, its absence almost certainly guarantees failure." Federal Sports Minister, Senator Kate Lundy, added that good gover na nce and sound administration were cornerstones of success in any business "and the business of sport was no different". But while the remedies to rectify compliance While good governance does not guarantee success, its absence almost certainly guarantees failure.
GRC Summer 2013