More and more businesses are slowly realizing that it’s difficult to keep up with regulatory changes and complex risks with traditional and siloed risk management systems. GRC provides an integrated, standardized platform to align business objectives with threats and operational uncertainty. After all, robust governance policies and strict risk management standards are the cornerstone of any successful business.

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You know your business inside out, making you the best person to prepare a custom GRC model for your organization. Upon successful implementation, you can turn your business into a well-oiled machine, insured from most external and internal threats for the foreseeable future.

What This Guide Covers

• What Is GRC?
• Importance
• Key Benefits
• Process
• Implementation Tips
• Trends
• Next Steps

What Is GRC?

Governance, risk and compliance, or GRC as it is popularly known, is a framework consisting of principles and practices that help organizations manage their risk and regulatory requirements. It unifies governance, risk management and compliance processes into a single structured program. Compared to legacy systems, it significantly improves speed, efficiency and profitability, offering a greater ROI.

In order to comprehend the meaning of GRC, it’s important to understand its three components individually:

Governance

Governance is a set of principles, policies and processes that dictate how an organization approaches its goals. It follows a top-down approach in implementation — involving key stakeholders like board members, senior management and other top-level executives. A robust governance structure ensures your organization operates ethically and transparently to meet its objectives.

It empowers the top brass to make risk-aware decisions, engage with stakeholders and get greater visibility into potential issues and incidents. However, data is an essential part of this equation. A GRC program helps access relevant metrics easily with data visualization, internal audits, reporting and risk assessment processes.

With good governance practices, you can maintain accountability across all business levels. Well-defined internal guidelines enable you to manage company resources optimally and strike a balance between risk and reward.

Risk Management

Risk management is the process of identifying, analyzing and mitigating potential risks. Risk can be of many types — cybersecurity, legal, financial, operational, contractual, third-party and unpredictable risk of natural disasters and crises. A successful risk management program involves collaboration between risk managers and risk management software to address threats before they cause any harm.

You can integrate risk management processes into your everyday operations as an alternative to adopting an independent risk management program. This improves risk visibility, making it easier to access risk data, prioritize threats and implement remediation strategies.

To achieve business objectives while minimizing risk exposure, there must be a balance between the organization’s risk appetite and risk tolerance. With clear lines of communication and a well-established hierarchy, you can significantly speed up risk response and incident resolution rates. Add in automated controls and business continuity plans, and you can secure your organization on multiple fronts.

Compliance

You must comply with multiple government regulations specific to your practice area. These regulations are continuously changing and modified, and the penalty for noncompliance can be anything from a slap on the wrist to a hefty fine. You don’t want to feature in the news for failing to comply with environmental standards.

With a high-performing compliance program, you can track multiple regulations, industry standards, rules and policies with minimal resources. Establish concise workflows to expedite compliance management and run internal audits from time to time to ensure things are in order.

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Importance

As risks grow more complex and compliance becomes more expensive, having an integrated plan of action makes handling threats significantly easier.

The aftermath of the COVID-19 pandemic further demonstrates the benefits of agility in risk management and compliance programs. With supply chains disrupted globally, organizations are increasingly opting for 3PL providers to benefit from the retail eCommerce industry’s massive growth.

But with an increase in third-party relationships comes increased risk and compliance obligations. A well-defined GRC framework makes it possible to integrate additional responsibilities without much friction.

Greater visibility into governance, risk and compliance programs provides the data necessary to recognize vulnerability areas and overcome challenges. It gives you enough room to capitalize on positive risks and minimize harmful incidents. The right GRC program will scale with your business, helping it grow while dealing with risk and compliance issues.

Driving Factors

To comprehend the importance of GRC, we must first understand the primary driving factors behind its implementation:

1. Growing Complexity in Risk Landscape

Risk is more complex and damaging today than it was a few decades ago. It’s no longer possible to tackle every threat with legacy programs or limit fallout to a particular sector without letting it spill over into other business units. GRC acts as a system of checks and balances, keeping all risks within tolerable limits.

2. Continuous Changes in Regulatory Compliance

You can develop strategies to keep track of regulatory changes in real time. Most GRC solutions can completely automate this process, removing the need to invest additional resources.

3. Importance of Data Privacy and Data Protection

On the one hand, data privacy and consumer identity protection laws like GDPR, CCPA and PIPL have forced organizations to ramp up their cybersecurity measures. On the other hand, implementing an integrated security solution has become decisively cheaper and more efficient than adopting a standalone program.

4. Increase in Third-party Relationships

Relationships with third-party entities and suppliers have grown increasingly complicated in the light of changing regulations and supply chain disruptions. GRC lets you evaluate and deal with third-party relationships in your best interests.

5. Introduction of Analytics

With improvements in big data analytics, having a GRC foundation allows you to get more insights from risk data.

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Key Benefits

A high-functioning GRC platform can boost your organization’s productivity and profitability beyond anything you can imagine. This section will discuss some of the primary benefits of implementing GRC:

Increase Visibility Into Programs

Because GRC provides a single framework for dealing with governance, risk and compliance, you get all your data in one place. This, in turn, helps you dig deeper into risk data and get contextual information on core vulnerabilities.

It’s not just enough to know what’s wrong; GRC allows you to understand what changes you need to incorporate into the three programs to prevent future incidents. Visibility into your financial and operational health helps make changes in real time and benchmark KPIs.

Reduce Costs and Optimize Resource Allocation

The biggest advantage of a GRC program is the amount of time and money you stand to save. You’ll no longer need to allocate resources separately for every unit because it unifies all three processes.

Additionally, if you decide to go with GRC software, you can automate day-to-day activities, freeing up your employees to spend time on billable activities.

Combined with AI and machine learning, you can even integrate chatbots and natural language processing (NLP) to prepare protocols for responding to and dealing with risk incidents without involving an actual person.

Centrally Access Risk Data

Store all risk information in a centralized database. You can access the data remotely and respond to risk incidents faster. You can even customize who and what devices can access the risk data for security reasons.

Unify Processes

This is one of the more subtle benefits — you won’t notice it right off the bat, but it’ll pay dividends in the long run. GRC establishes a standardized workflow, taxonomy and vocabulary. Standardized practices make it easier to train, evaluate and benchmark performance, and ensure the platform keeps running smoothly despite employee turnover.

Over time, it also creates a risk-aware work culture, resulting in fewer risk incidents. It builds the organization’s risk resilience and eliminates functional and operational silos.

Leverage Advanced Analytics

Unrestricted access to risk data lets you dive deeper to uncover hidden insights that would otherwise have escaped due to a lack of oversight. Additionally, integrated advanced analytics tools and reporting capabilities help analyze, share and use risk information in a way beneficial to both the organization and its customers.

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Process

While implementing a GRC framework can be different for every organization, the general approach is more or less the same. You can break it down into five steps:

1. Learn What Your Organization Needs

The first step is to familiarize yourself with your organization’s requirements and cultural values. Whatever model and strategies you choose must be in sync with the company’s existing processes to receive the green signal from senior management. Always keep them in the loop because communication is critical.

2. Identify a Relevant Framework

Depending on your industry, there’ll be multiple security control frameworks for you to choose from. Identify which ones are relevant to your organization and incorporate them into your custom GRC model.

3. Align With Company Objectives

Ensure your model aligns with the company’s short and long-term objectives. It should be well-equipped to simultaneously deal with recurring threats and enable you to capitalize on positive risks and opportunities whenever possible.

4. Execute

This step is where you do a trial run of the model to see if it’s performing as expected. It requires continuous monitoring and benchmarking to see if everything is moving forward correctly or if you need to make further improvements.

5. Review and Revise

Even if the model performs as expected, your work doesn’t end there. It will require regular tweaks to align with new company policies, evolving risks and regulatory changes.

If you become complacent, it might weaken the structural integrity of your model, exposing the business to internal and external vulnerabilities.

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Implementation Tips

Once you get down to the nitty-gritty, implementing a GRC program can pose unique challenges for the uninitiated. Knowing about some of them beforehand can make sure you avoid common pitfalls.

1. Don’t Overextend

Understanding what your company needs and what you can achieve with your budget and resources is crucial. Don’t stretch yourself too thin or establish goals too difficult to achieve.

2. Communication Is Key

A GRC framework affects the entire organization, so it’s important to keep everyone in the loop. Regular communication is all the more relevant for senior management, board members and other executives. You don’t want to waste all your hard work just because you forgot to okay something by the board.

3. Establish a Clear Hierarchy

For the model to be consistent and efficient, you must ensure it has clearly defined roles and responsibilities. Well-established guidelines and expectations can ensure your model outlives you and maintains the same level of efficiency despite employee turnover.

GRC Trends

The GRC environment is changing to keep up with global trends and developments. Over the last few years, we have seen newer and stricter regulations, unpredictable natural disasters and a sharp increase in cyberattacks. This section will discuss some trends that have emerged from this trial by fire and how they will shape the industry.

Planning for the Unpredictable

The pandemic has changed how businesses approach the unpredictable. While it’s not possible to cover every potential scenario, it’s not impossible to plan for the unexpected. Organizations are prioritizing continuity planning while building resilience to disruption in general.

You can run business continuity plans through different “what if” scenarios to compare the effectiveness and make necessary adjustments. Identifying emerging risk trends and forward planning allow you to react quickly to unpredictable and damaging circumstances.

Digital Transformation as an Ally

Digital transformation has been at the forefront of new developments in the GRC industry. Using AI and machine learning, you can anticipate risk incidents, predict patterns, recognize anomalous behavior and recommend risk mitigation strategies.

In the near future, it’s reasonable to expect AI to play an even more significant role in automation and data-based decision-making capabilities.

Focus On Collaboration and Crowdsourcing

When it comes to risk management and compliance, knowing is half the battle. Instead of fighting risk individually, companies are coming together to share risk information and signatures from the front lines. Access to real-time risk intelligence enables you to identify new and evolving risks like zero-day attacks and fileless malware before they infiltrate deep enough to cause lasting damage.

Crowdsourcing risk data enables your risk managers to analyze the efficiency of various controls and remediation strategies. They can then retrofit existing controls or amp up their efficiency to deal with new threats. With further advancements in the field of data analytics, the benefits of fighting risk as a unified collective will only increase.

Agility via Automation

Automation is slowly gaining the status of a necessity, especially in mid to large-sized organizations. Large businesses generate more data, need more oversight, generate more processes and require multiple policies — all of which can take up a significant amount of company resources.

Additionally, with the advent of smart devices and sensors, every endpoint represents a potential point of vulnerability and needs continuous policing. You can automate many of these menial tasks, allowing your employees to focus on your service.

Developments in AI and predictive analytics can even enable you to address customer clients and provide service without any human intervention. Preprogrammed chatbots and NLP provide much-needed agility in dealing with risk incidents.

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Next Steps

A successful GRC program can make or break an organization. Before moving to the implementation stage, make sure you understand what it does and what to expect. GRC is a collective effort, and it’s your responsibility to keep everyone in the loop. Don’t be afraid to try new things to determine what works for your business. Benchmark every step and ensure the product aligns with your organization’s objectives before company-wide implementation.

Did we miss anything? Do you think GRC is the logical step forward? Let us know in the comments section below.