Originally published in Canadian Gaming Business Magazine
Some people refer to it as corporate governance, others just call it governance, and some simply refer to it as a pain in the @$$!, but regardless of the name, one thing is certain: good governance is a crucial element for any business, and the gaming industry is no exception. The definition of good governance varies depending on who you might ask, but generally speaking, an organization with good governance has the proper structure, culture, and framework in place in order to exceptionally meet (and often go above and beyond) defined rules and regulations. We would take it one step further - our definition of good governance would also include ensuring that concepts such as: accountability, transparency, ethics, integrity, creation of long-term value, and equality are also in good standing.
Gone are the days of mobsters running casinos with blatant disregard for standards of compliance or the law. Regulators today are focused on ensuring gaming organizations have the right corporate elements in place to comply with requirements and are conducting business ethically. These practices are also all in the best interest of the organization’s shareholders.
The concept may seem overwhelming, but practicing good governance can be invaluable – aka: save you money, time and effort in the long run – not to mention also put you in good standing with your regulators! There are three areas we would recommend that gaming organizations focus on, in order to get the biggest “bang-for-your-buck” when it comes to enhancing good governance and making your organization run more efficiently and effectively:
Board of Directors education / training: this is important for obvious reasons: take, for example, the risk of anti-money laundering, how can directors oversee anti-money laundering initiatives, if they do not understand the relevant rules, regulations, and associated risks? Often directors may not have the right technical knowledge to effectively oversee critical elements specific to the gaming industry. It’s not to say that every director must be a Certified Anti-Money Laundering Specialist (‘CAMS’), but there should be a foundational element of understanding. Consider including a training element in every board meeting; this can be a quick update on new directives or a longer session on more critical elements (e.g. session on newly created privacy rules). Including educational sessions will enable your Board to act with more confidence in decision making and provide regulators with more confidence in your Board’s ability to govern.
The role of internal audit: This business function, which may be nightmare inducing, can be your ally! Really! Your internal audit function can serve as a proactive management tool. An objective audit can uncover areas for improvement or provide suggestions to better meet regulatory requirements. Consider re-thinking your internal audit function to include a mandate to assess areas for efficiency throughout your organization whether it be IT, compliance, finance, security, or otherwise. Gaming regulators can place reliance on an organization’s internal audit function, so why not make this function a broader component of your overall strategic planning and good governance agenda.
Risk management: every organization needs to think about risk, whether it’s through a formal risk management function or accomplished informally (as tends to be the case for smaller organizations). ‘Risk’ is not a mere buzzword. Risk management is a method which helps you focus your attention on the areas of greatest concern to your organization. Consider working with your Board of Directors and executive management to begin formalizing your risk management approach. Sharing plans and accomplishments with respective regulators is also something organizations should consider.
Creating a culture of good governance and embedding it in your organization’s DNA can be cumbersome and is often a long road; however the reward in the end can be well worth the effort. We advise our clients that it’s crucial to start formalizing this process by understanding their own organization’s current structure, and determining the steps needed to improve upon it. Good governance goes beyond just a catch phrase and can help make your organization more efficient, effective, and generate long-term value for shareholders.
To read more on improving efficiency within your organization beyond good governance, click here.
About Richter : Founded in Montreal in 1926, Richter is a licensed public accounting firm that provides assurance, tax and wealth management services, as well as financial advisory services in the areas of organizational restructuring and insolvency, business valuation, corporate finance, litigation support, and forensic accounting. Our commitment to excellence, our in-depth understanding of financial issues and our practical problem-solving methods have positioned us as one of the most important independent accounting, organizational advisory and consulting firms in the country. Richter has offices in both Toronto and Montreal. Follow us on LinkedIn, Facebook, and Twitter.