Governance, Risk, and Compliance (GRC) is a structured way to align IT with business goals while managing risks and meeting all industry and government regulations. It includes tools and processes to unify an organization's governance and risk management with its technological innovation and adoption. Companies use GRC to achieve organizational goals reliably, remove uncertainty, and meet compliance requirements.
.Most businesses are familiar with these terms but have practiced them separately in the past. GRC combines governance, risk management, and compliance in one coordinated model. This helps your company reduce wastage, increase efficiency, reduce noncompliance risk, and share information more effectively.
Governance
Governance is the set of policies, rules, or frameworks that a company uses to achieve its business goals. It defines the responsibilities of key stakeholders, such as the board of directors and senior management. For example, good corporate governance supports your team in including the company's social responsibility policy in their plans.
Good governance includes the following:
· Ethics and accountability
· Transparent information sharing
· Conflict resolution policies
· Resource management
Risk management
Businesses face different types of risks, including financial, legal, strategic, and security risks. Proper risk management helps businesses identify these risks and find ways to remediate any that are found. Companies use an enterprise risk management program to predict potential problems and minimize losses. For example, you can use risk assessment to find security loopholes in your computer system and apply a fix.
Compliance
Compliance is the act of following rules, laws, and regulations. It applies to legal and regulatory requirements set by industrial bodies and also for internal corporate policies. In GRC, compliance involves implementing procedures to ensure that business activities comply with the respective regulations. For example, healthcare organizations must comply with laws like HIPAA that protect patients' privacy.
Why is GRC important?
By implementing GRC programs, businesses can make better decisions in a risk-aware environment. An effective GRC program helps key stakeholders set policies from a shared perspective and comply with regulatory requirements. With GRC, the entire company comes together in its policies, decisions, and actions.
The following are some benefits of implementing a GRC strategy at your organization.
Data-driven decision-making
You can make data-driven decisions within a shorter time frame by monitoring your resources, setting up rules or frameworks, and using GRC software and tools.
Responsible operations
GRC streamlines operations around a common culture that promotes ethical values and creates a healthy environment for growth. It guides strong organizational culture development and ethical decision-making in the organization.
Improved cybersecurity
With an integrated GRC approach, businesses can employ data security measures to protect customer data and private information. Implementing a GRC strategy is essential for your organization due to increasing cyber risk that threatens users' data and privacy. It helps organizations comply with data privacy regulations like the General Data Protection Regulation (GDPR). With a GRC IT strategy, you build customer trust and protect your business from penalties.
What drives GRC implementation?
Companies of all sizes face challenges that can endanger revenue, reputation, and customer and stakeholder interest. Some of these challenges include the following:
· Internet connectivity introducing cyber risks that might compromise data storage security
· Businesses needing to comply with new or updated regulatory requirements
· Companies needing data privacy and protection
· Companies facing more uncertainties in the modern business landscape
· Risk management costs increasing at an unprecedented rate
· Complex third-party business relationships increasing risk
These challenges create demand for a strategy to navigate businesses toward their goals. Conventional third-party risk management and regulatory compliance methods are not enough. Hence, GRC was introduced as a unified approach to help stakeholders make accurate decisions.
How does GRC work?
GRC in any organization works on the following principles:
Key stakeholders
GRC requires cross-functional collaboration across different departments that practices governance, risk management, and regulatory compliance. Some examples include the following:
· Senior executives who assess risks when making strategic decisions
· Legal teams who help businesses mitigate legal exposures
· Finance managers who support compliance with regulatory requirements
· HR executives who deal with confidential recruitment information
· IT departments that protect data from cyber threats
GRC framework
A GRC framework is a model for managing governance and compliance risk in a company. It involves identifying the key policies that can drive the company toward its goals. By adopting a GRC framework, you can take a proactive approach to mitigating risks, making well-informed decisions, and ensuring business continuity.
Companies implement GRC by adopting GRC frameworks that contain key policies that align with the organization's strategic objectives. Key stakeholders base their work on a shared understanding from the GRC framework as they devise policies, structure workflows, and govern the company. Companies might use software and tools to coordinate and monitor the success of the GRC framework.
GRC maturity
GRC maturity is the level of integration of governance, risk assessment, and compliance within an organization. You achieve a high level of GRC maturity when a well-planned GRC strategy results in cost efficiency, productivity, and effectiveness in risk mitigation. Meanwhile, a low level of GRC maturity is unproductive and keeps business units working in silos.
What is the GRC Capability Model?
The GRC Capability Model contains guidelines that help companies implement GRC and achieve principled performance. It ensures a common understanding of communication, policies, and training. You can take a cohesive and structured approach to incorporate GRC operations across your organization.
Learn
You learn about the context, values, and culture of your company so you can define strategies and actions that reliably achieve objectives.
Align
Ensure that your strategy, actions, and objectives are in alignment. You do so by considering opportunities, threats, values, and requirements when making decisions.
Perform
GRC encourages you to take actions that bring results, avoid those that hinder goals, and monitor your operations to detect sudden changes.
Review
You revisit your strategy and actions to ensure they align with the business goals. For example, regulatory changes could require a change of approach.
How do organizations implement an effective GRC strategy?
You must bring different parts of your business into a unified framework to implement GRC. Building an effective GRC requires continuous evaluation and improvement. The following tips make GRC implementation easier.
Define clear goals
Start by determining what goals you want to accomplish with the GRC model. For example, you might want to address the risk of noncompliance to data privacy laws.
Assess existing procedures
Evaluate current processes and technologies in your company that you use to handle governance, risk, and compliance. You can then plan and choose the right GRC frameworks and tools.
Start from the top
Senior executives play a leading role in the GRC program. They must understand the benefits of implementing GRC for policies and how it helps them make decisions and build a risk-aware culture. Top leaders set clear GRC-driven policies and encourage acceptance within the organization.
Test the GRC framework
Test the GRC framework on one business unit or process, and then evaluate whether the chosen framework aligns with your goals. By conducting small-scale testing, you can make helpful changes to the GRC system before you implement it in the entire organization.
Set clear roles and responsibilities
GRC is a collective team effort. Although senior executives are responsible for setting key policies, legal, finance, and IT personnel are equally accountable for GRC success. Defining the roles and responsibilities of each employee promotes accountability. It allows employees to report and address GRC issues promptly.
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