Controlling Risk: An Approach to Automating the Management of

Segregation of Duties and Corrective Actions in Oracle ERP Cloud.

As your organization adopts digital transformation initiatives, you are increasingly exposed to new risks, such as insufficient Segregation of Duties (SoD), excessive access, and complex access processes that are time-consuming and prone to errors. 

It’s no secret that Segregation of Duties is a critical component of security and compliance. With the potential for fraudulent activities and financial misstatement errors, it’s essential to ensure that no one individual controls multiple phases of a transaction. That’s why your organization must have an effective approach to remediate Segregation of Duties conflicts in its ERP systems, particularly in cloud-based systems like Oracle ERP Cloud. 

Luckily, there are a variety of strategies, tools, and solutions available to help your organization effectively remediate Segregation of Duties conflicts in Oracle ERP Cloud, and minimize the risk of fraud and financial misstatement risks.

Segregation of Duties Remediation in Oracle ERP Cloud

Step 1: Rule Selection and Alignment

Before diving into the complexities of Segregation of Duties within Oracle ERP Cloud, your organization must lay a sturdy groundwork. Collaborative efforts between compliance and IT teams are vital to selecting rules that align with organizational objectives and accommodate risk tolerance levels. This initial step not only ensures agreement between teams but also sets the stage for effective Segregation of Duties enforcement across the enterprise.

Here’s how this step is typically accomplished: 

• Determining Risk Tolerance: Consider your organization’s risk tolerance level, which determines the extent of segregation required and how violations are addressed. This assessment guides the selection of Segregation of Duties rules and helps establish a balance between risk mitigation and operational efficiency. 

• Alignment Between Compliance and IT Teams: Ensuring agreement between compliance and IT teams is crucial, as they are responsible for maintaining, provisioning, and managing users within the ERP system. Alignment between these teams encourages effective communication and coordination in implementing Segregation of Duties rules and addressing violations quickly. 

• Continuous Review and Adjustment: Segregation of Duties rules are subject to continuous review and adjustment to ensure they remain effective in mitigating risks and supporting the organization’s evolving needs. This ongoing evaluation process involves soliciting feedback from stakeholders, monitoring compliance metrics, and making refinements to Segregation of Duties rules as needed. 

Step 2: Segregation of Duties Analysis and Corrective Actions

Forming a diverse team to conduct a comprehensive review of Segregation of Duties conflicts within your organization’s operations is crucial for identifying and addressing any remaining issues. Collaborating to determine corrective actions based on your analysis findings ensures that modifications or risk mitigations are implemented quickly and accurately. This step is essential for maintaining compliance with regulatory requirements and minimizing risk exposure. 

Here’s how this step is typically accomplished: 

• Scope Definition: Establish the scope of the review, outlining the systems, processes, and markets to be assessed for potential Segregation of Duties conflicts. This includes identifying critical applications, access controls, and sensitive business functions that may pose risks. 

• Data Collection and Analysis: Collect relevant data related to user roles, permissions, access logs, and historical incidents of Segregation of Duties violations. Advanced data analysis techniques may be used to identify patterns, anomalies, and potential conflicts that require further investigation. 

• Collaborative Review: Team members analyze the collected data to identify instances of Segregation of Duties conflicts within your organization’s operations. This involves examining job roles, access privileges, and segregation rules to determine compliance gaps and areas of improvement. 

• Corrective Action Planning: Based on the analysis findings, the team collaborates to develop corrective action plans tailored to address identified Segregation of Duties conflicts effectively. These plans may include role reassignments, access control adjustments, process redesign, or additional employee training programs. 

• Control Implementation and Monitoring: Ensure timely and accurate implementation of corrective actions to mitigate Segregation of Duties conflicts. Implement continuous monitoring mechanisms to track the effectiveness of implemented solutions and identify any emerging issues or recurring patterns. 

• Documentation and Reporting: Maintain detailed documentation of your review process, analysis findings, and corrective actions are maintained for audit and compliance purposes. Comprehensive reports are generated to communicate the outcomes of the Segregation of Duties review to relevant stakeholders, including auditors and regulatory authorities. 

Step 3: False Positives Management and Logic Development

False positives are instances where the system incorrectly flags an activity as a rule violation when it’s not. These false positives can be a significant challenge for organizations that are trying to remediate Segregation of Duties conflicts. To address this issue, your organization must develop effective false-positive management strategies and logic that ensure that only genuine Segregation of Duties conflicts are flagged. 

Here’s how this step is typically accomplished: 

• False Positive Analysis: Conduct a comprehensive analysis of false positives to determine their causes and patterns. This involves examining the Segregation of Duties rules and the system’s logic to identify any areas that are likely to generate false positives. 

• Logic Development: Based on the false positive analysis, develop logic that reduces the number of false positives generated by the system. This may involve modifying the rules, adjusting the system’s logic, or implementing analytics that better identify genuine Segregation of Duties conflicts. 

• Continuous Improvement: False positive management is an ongoing process that requires continuous improvement. Your organization must regularly review and refine its false positive management strategies and logic to remain effective and up-to-date.

Step 4: Remediation of Conflicts and Risk Mitigation

After identifying Segregation of Duties conflicts and assessing associated risks, your organization must implement remediation actions to mitigate these risks effectively. This may involve adjusting user permissions, roles, or access controls to ensure that no individual has excessive privileges that could lead to fraudulent activities or errors. Implementing compensating controls, such as monitoring tools, can enhance risk mitigation efforts by providing continuous oversight and detecting potential issues.

Here’s how this step is typically accomplished:

• Identifying Remaining Segregation of Duties Conflicts and Assessing Risks: Identify Segregation of Duties conflicts through a detailed analysis of user roles, permissions, and access controls within systems and applications. These conflicts can then be assessed to determine the potential impact on security, compliance, and operational integrity.

• Remediation Planning: Based on your analysis findings, you will develop a remediation plan to address identified conflicts and mitigate associated risks effectively. This plan outlines specific actions and timelines for adjusting user permissions, roles, or access controls to eliminate or reduce the risks posed by Segregation of Duties conflicts.

• Adjusting User Permissions and Roles: Remediation actions may involve adjusting user permissions and roles to ensure that no individual possesses excessive privileges that could be exploited for fraudulent activities or errors. This may include revoking unnecessary access rights, reassigning roles, or implementing stricter access controls based on the principle of least privilege.

• Implementing Compensating Controls: In addition to adjusting user permissions and roles, you can leverage compensating controls to enhance risk mitigation efforts. Compensating controls, such as monitoring tools and automated alerts, provide continuous oversight of user activities and detect potential issues or violations in real-time.

Step 5: Integration with IT Service Management (ITSM) and Corrective Actions

Integrating your ITSM platform, like ServiceNow, with the Segregation of Duties management system enables seamless workflow implementation for corrective actions. This allows you to automate Segregation of Duties remediation efforts in a timely and complete to reduce the risk of violations and improve compliance.

Here’s how this step is typically performed:

These are six steps for remediating Segregation of Duties conflicts with ITSM integration:

1. Evaluate the System: The first step is to assess the existing ITSM platform and determine its capabilities for Segregation of Duties integration.

2. Map Ticket Elements: Next, map the data elements of the ticket within the ITSM system to the Segregation of Duties platform. This includes defining routing information and actions to be taken.

3. Configure Post-Service: Configure the post-service within the Segregation of Duties platform to post tickets into the ITSM system based on the mapping established in step two.

4. Enable Alerts: Enable the ITSM system and its users to receive alerts and perform corrective actions within target applications.

5. Retrieve Status Updates: Set up the GET API service within the Segregation of Duties platform to receive updates on ticket statuses from the ITSM system.

6. Run Audit Analytics: Lastly, run audit analytics to ensure that closed tickets within the ITSM system correspond to the actual closure of risks or the mitigation of risks and corrective actions within Oracle ERP Cloud.

Having effective Separation of Duties policies is vital for any IT infrastructure. Failure to implement them can lead to significant financial and reputational damage and put your organization in danger of fraud and financial misstatement errors. To guarantee your organization’s long-term success, it is critical to establish and maintain effective Segregation of Duties policies.

In addition to the financial and reputational damage, ineffective controls can result in hefty fines and legal action. An effective approach to remediate Segregation of Duties conflicts is essential in today’s digital age, where organizations are increasingly exposed to new risks. 

By implementing the strategies, tools, and solutions discussed in this guide, your organization can minimize the risk of fraud and financial misstatement risks, maintain compliance with regulatory requirements, and safeguard its reputation and financial stability.