Governance, risk, and compliance (GRC) is a consolidated approach to aligning business and IT while managing risk and meeting government regulations. By implementing a robust and adaptable GRC program, executives can make better decisions concerning the continuity of their business through almost any eventuality.
Here’s a breakdown of the basic components of a GRC framework:
Governance is the combination of policies and rules by which a business is governed. This includes the responsibilities of senior management and other key stakeholders. Good governance includes effective resource management, conflict resolution plans, transparent information sharing, and business-wide accountability.
Risk management helps businesses identify and mitigate risks across domains like information security, finance, legal, and business strategy. Risk management works across all business departments to develop a unified framework incorporating disaster recovery and business continuity.
Compliance is the process of ensuring that the organization and everyone in it follows all legal regulations, standards, and ethical policies. For example, every health service in Australia is legally bound to the Privacy Act of 1988 to follow certain standards for protecting patient health information (PHI).
[ Also read Why cybersecurity teams are central to organizational trust. ]
Adopting the right GRC programmer can be life-changing for a business by better preparing it for periods of economic uncertainty, changes to the regulatory landscape, and a multitude of shorter-term threats like cyberattacks and data loss.
However, major challenges remain. For example, 90 percent of compliance leaders expect evolving regulatory and customer demands to push up the costs of achieving and maintaining compliance by as much as 30 percent in the coming years.
To prepare for such challenges, business leaders must reevaluate their priorities. Here are four key points to keep in mind:
1. Adopt a business-first approach
When it comes to GRC, it’s essential to put the needs of the business first. While regulatory compliance might apply across the board, every organization operates under a unique set of circumstances – hence the need for a tailored approach. This means creating a GRC program that aligns with the goals of the business rather than simply approaching it as a box-ticking exercise.
Taking a business-centric approach ensures that your GRC program helps drive success and promote resilience in the face of risk. By engaging with stakeholders across the organization, GRC leaders can ensure that their program is relevant, effective, and widely supported throughout the business. Remember – first and foremost, GRC is about creating a culture of compliance and accountability, and that means building better relationships.
2. Categorize and prioritize risks
It is impossible to completely eliminate risk, and every organization has limited resources to do so. As such, risks need to be managed according to business criticality while taking into account legal obligations.
This begins with categorizing and prioritizing risks in a way that makes sense for your business. You’ll want to consider the likelihood and impact of every risk you can think of, including both external risks like cyberattacks and internal ones like employee errors.
Third-party risk management is especially important these days due to the dramatic increase in attacks against supply chains and third-party vendors. No matter how robust your internal policies and controls are, a third-party vulnerability can easily bring everything down. Because of this, organizations need to build a single source of risk truth that grants visibility into every third-party and fourth-party risk.
Remember, a business is only as strong as its weakest link.
3. Keep track of global regulations
GRC isn’t a project you do once or even one you perform at regular intervals. Rather, it’s a continuous process and a form of change management as your business adapts to changing regulatory and economic realities. Achieving continuous compliance can be daunting since it requires regularly monitoring your company’s security posture to ensure compliance with new regulations and industry best practices.
Of course, most regulatory initiatives take years to come into force, which theoretically gives your business plenty of time to adapt. In practice, however, things can change much quicker than widely anticipated, as the rollout of regulations like GDPR and CCPA demonstrated when they left many organizations struggling to keep up.
While there’s usually plenty of advance warning before new regulations come into force, it can still take months or even years to ensure all systems and processes are ready. It’s always better to be proactive by keeping a pulse on global compliance regimes.
4. Align GRC with ESG initiatives
GRC shares a common element with environmental, social, and governance (ESG) strategies: governance. ESG itself is an evolution of corporate social responsibility (CSR), and both are forms of self-regulation that serve to contribute positively to the communities that a business serves. While ESG and CSR are business strategies that aim to meet certain targets, alignment with GRC can help formalize those strategies by offering a more detailed and structured approach.
In other words, while GRC is more about reducing risk and staying on the right side of the law, ESG is about going above and beyond current regulations and industry best practices. This can add enormous value to a company by enhancing its brand image and making it more future-proof as regulations and expectations evolve.
It stands to reason that both GRC and ESG should be closely intertwined with effective monitoring and reporting applied across the board.
Why it’s time to invest in business integration
The business technology landscape has become dizzyingly complex, comprising a multitude of devices, accounts, and cloud-based assets. Because of this, it has never been more difficult to keep track of everything. This lack of visibility can make GRC an extremely laborious task, but it’s also one that technology can fix.
To support strategic decision-making, effective risk management, and greater adaptability to change, today’s businesses need to break down the silos. Integrated business management tools make that possible by bringing your organization’s digital assets and information together under a single pane of glass.
After all, you can only protect and manage what you know about.
[ Learn the non-negotiable skills, technologies, and processes CIOs are leaning on to build resilience and agility in this HBR Analytic Services report: Pillars of resilient digital transformation: How CIOs are driving organizational agility. ]
