What Framingham, Massachusetts Can Teach the World of Governance, Risk and Audit

Framingham is a town in Middlesex County, Massachusetts, United States.

As of the 2010 census 68,000 residents called it home.

It is also home to one of the most comprehensive studies ever undertaken.

The Framingham Heart Study is an ongoing cardiovascular study based in Framingham.

The study began in 1948 with 5,209 adult subjects from Framingham, and is now on its third generation of participants.

Prior to it almost nothing was known about “the epidemiology of hypertensive or arteriosclerotic cardiovascular disease.” Much of the now-common knowledge concerning heart disease, such as the effects of diet, exercise and common medications such as aspirin, is based on this longitudinal study.

Reading about it got McLeod Governance thinking – why is that the practices of risk management, corporate governance and internal audit not undertake longitudinal studies?

Would there be any benefit if these disciplines did?

Firstly – what is a longitudinal study?

A longitudinal study is a correlational research study that involves repeated observations of the same items over long periods of time — often many decades. It is a type of observational study.

Longitudinal studies are often used in psychology to study developmental trends across the life span, and in sociology to study life events throughout lifetimes or generations.

Longitudinal studies allow social scientists to distinguish short from long-term phenomena, such as poverty.

If the poverty rate is 10% at a point in time, this may mean that 10% of the population are always poor, or that the whole population experiences poverty for 10% of the time. It is not possible to conclude which of these possibilities is the case using one-off cross-sectional studies.

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Why then – given the benefits that longitudinal studies bring to the subjects being examined – has there not been a serious attempt to apply such rigour to the analysis of an organisation’s internal control and corporate goverance environment?

We hold true (although many times it turns out to be anything but) that organisations are perpetual beasts.

This being the case then surely they represent a great study … but yet for some reason the articulation of risk, controls and governance tends to be in the current environment.

What are the risks that face the organisation today our studies ask (whether they be short or long term is beside the point).

Not – what has the history of this organisation said about what risks are likely to manifest themselves and how they are likely to be handled by the organisation.

The doubters amongst you (as we are sure there are!) will say that a study of people is different to a study of organisations and that may be the case.

The even stronger doubters (you know who you are!) will say that an organisation changes over time so the review of the history of risks is not necessarily an indicator of what is happening now and what is likely to happen in the future.

Once again – a valid comment.

But for the fact that we don’t actually know if those rebuttals are accurate.

There has never been a serious longitudinal study in the area of risk, governance and controls.

Now is the time to start.

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