Discover the power of the 4 Eyes Principle in governance management. Learn how this principle safeguards data, prevents fraud, and enhances accountability.
Dear Legal Ops!
Welcome to this week’s Let’s talk about Legal Ops, offered by Newton. We tackle corporate legal departments, speed up processes, and career growth. Please send us your questions; in return, we come back with real insights and actionable tips.
If you find this post valuable, don’t miss the chance to check out our latest posts.
- Getting SOC2 and ISO27001 ready
- How to build a culture of compliance
- 4 Eyes Principle: Effective Governance Management
Subscribe to get access to more posts like these!
Join Newton’s newsletter to receive our blogs, templates, and the latest information right in your inbox. You can unsubscribe at any time.
Effective governance management is crucial for organizations to ensure data integrity, security, and compliance. One of the powerful principles that have gained prominence is the “4 Eyes Principle”, also known as the 2-Man Rule. This principle emphasizes the importance of having two people approve actions, decisions, and data to enhance accuracy, and accountability, and prevent potential errors.
In this article, we will delve into the core of the 4 Eyes Principle and explore real-world examples where it safeguarded valuable data.
In this article, we will cover the following:
- Understanding the 4 Eye Principle
- Examples of the 4 Eyes Principle
- What are the benefits of the 4 Eyes Principle?
- Best Practices for Implementing the 4 Eyes Principle:
- How Newton implemented the 4 Eyes Principle
Understanding the 4 Eye Principle
The 4 Eyes Principle, also known as the “Two-Person Integrity Principle”, is based on the premise that essential tasks or actions should be reviewed by at least two authorized people before they are considered finalized. The principle acts as a control mechanism, reducing the risk of errors, fraud, or malicious activities that may compromise sensitive data. By enforcing approval by two people, companies create a robust system of checks and ensure the accuracy of critical processes.
From the legal perspective, implementing the 4 Eyes Principle helps organizations achieve compliance with regulatory requirements and standards such as the General Data Protection Regulation (GDPR) and the Payment Card Industry Data Security Standard (PCI DSS).
Examples of the 4 Eyes Principle
- Financial Transactions: Financial institutions rely on the 4 Eyes Principle to protect their customers’ assets and financial data. For example, when transferring large sums of money, the 4 Eyes Principle is typically required to review and approve the transaction before it is processed. This double-checking procedure minimizes the risk of fraudulent activities and errors that could result in financial losses.
- Software Development: In software development, the 4 Eyes Principle plays a vital role in ensuring code quality and security. Before code changes are merged into the main branch or deployed to production environments, they undergo a review process by at least two developers. This practice helps identify and rectify potential vulnerabilities, improves the overall reliability of the software, and reduces the likelihood of security breaches.
What are the benefits of the 4 Eyes Principle?
Adopting the 4 Eyes Principle within governance management brings several benefits:
- Error detection and correction. Relying on two or more individuals in making critical actions or decisions significantly enhances the chances of identifying errors or inconsistencies. By catching and rectifying mistakes before they escalate, organizations can maintain data integrity and prevent potential financial or legal consequences.
- Fraud Prevention: Dual approval is an effective way to prevent fraudulent activities. Requiring two people to validate critical transactions or access sensitive data reduces the risk of unauthorized manipulation or misuse, providing a higher level of data security.
- Accountability and Responsibility: The 4 Eyes Principle establishes a culture of accountability within organizations. This means that each person involved in the review process is responsible for the accuracy and integrity of the approved actions. This shared responsibility creates a sense of ownership and causes a greater level of diligence and attention to detail.
- Compliance and Regulatory Requirements: Many industries are subject to strict regulatory frameworks and mandate having more security measures. The 4 Eyes Principle serves as an effective system to ensure compliance with such security requirements and protect sensitive data.
Best Practices for Implementing the 4 Eyes Principle:
To effectively implement the 4 Eyes Principle within governance management, organizations should consider the following best practices:
- Clearly Define Approval Processes: Establish clear guidelines on which actions or decisions you need double approval. Clearly define the roles and responsibilities of each individual involved in the review process to avoid confusion or gaps in accountability.
- Rotate Reviewers: To reduce the risk of collision, periodically rotate people, who are involved in the review process. This practice ensures fresh perspectives and helps maintain an unbiased and rigorous approval system.
- Documentation and Audit Trails: Maintain documentation of all approved actions, decisions, and reviews. This documentation serves as an audit trail, enabling organizations to track and verify the accuracy and integrity of critical processes. It also aids in compliance efforts and provides valuable insights for process improvement.
- Training and Awareness: Provide training to all users involved in the 4 Eyes Principle process. Ensure they understand the importance of their role in maintaining data security, accuracy, and compliance.
How Newton implemented the 4 Eyes Principle
We asked our CTO, Christian Kirchhoff to explain the 4 Eyes Principle process and how it is implemented in NEWTON.
“The 4 Eyes Principle can be configured on a per data model and field basis. This means that for each data model (e.g. entity, contact, project) we can configure which fields need the 4 Eyes Principle. It is configurable on a general level, but also for each field, which users can review (which means confirm or decline) change requests in such fields.” – explains our CTO, Christian Kirchhoff.
4 Eyes Principle is integretable in different ways. In Newton, reviewers see all their pending change requests. They can see who requested the change, the optional change request reference, but also the current and requested new values, as well as links to the data itself to review the data in the context of all other data. The reviewers can either confirm or decline the request. After declining or accepting the change, it is displayed in the history of all past changes, making it easier to track all change requests.
If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. You can unsubscribe at any time.
The 4 Eyes Principle is a core principle for effective governance management that promotes accuracy, accountability, and protection of valuable data. By implementing this principle, organizations can strengthen their control mechanisms, detect errors early, prevent fraud, and comply with regulatory requirements. Newton can help you to implement that. We allow companies to not only manage entities, but also assign roles, enable the 4 Eyes Principle, and have a trial audit. All of these are implemented in one place to ensure the efficiency and simplicity of entity management.
About this article
Erçin Dedeoğlu (2022)
Wiebe de Roos (2020)
The four-eyes principle: what’s important in a DevOps world
Cros Legacy (2019).
Four Eyes principle
Niccolo Abriani & Armando Catania (2022).
Corporate Governance and the So-Called ‘Four-Eyes Principle’
German Federal Ministry of Finance (2020)
Principles of Good Corporate Governance and Active Management of Federal Holdings.