In the face of technological advancements taking the corporate world by storm, companies cannot afford to forget about their employees. It is more difficult said than done to coordinate people, procedures, and technology while minimizing risks and remaining compliant. Most businesses struggle with this and end up with poor processes that result in strategic errors, leaving the organization wide open to governance and compliance risks.
This is where a GRC or a Governance, Risk, and Compliance program comes in.
GRC refers to a company’s approach to controlling risk and upholding legal compliance while achieving its objectives. Several teams, including compliance, legal, finance, IT, HR, the executive suite, and the board, must support it and work together for the overall betterment of the company. The Open Compliance and Ethics Group (OCEG) introduced the GRC concept in 2003. At its core, GRC aims to align an entire organization on risk management and compliance to keep the business secure and capable of achieving its objectives.
In this blog, we will give you a complete overview of a GRC program — its importance and its components, the levels of its maturity models, and some best practices you can follow to do the same.
Why is a GRC Program Important For Your Organization?
GRC systems, compliance platforms, and other tools aid in implementing and overseeing risk assessment techniques throughout the corporate ecosystem. These cover a wide spectrum of financial, strategic, or operational hazards. By centralizing these processes, GRC makes evaluating risks, tracking incidents, and making decisions easier.
GRC compliance technologies assist organizations in increasing process effectiveness, scalability, and work environment quality. It promotes team collaboration and eliminates the “silo culture,” such as the refusal to exchange information with other departments.
In an environment ridden with governance and compliance risks, a GRC program can help organizations better manage data processes and employees while managing stakeholder policies and complying with regulatory practices.
What are the benefits?
- Greater Efficiency:
With technologies like GRC, business functions like risk assessment, audits, compliance management, and communication can be smooth. Organizations may eliminate silos, efficiently comply, monitor processes, track goals, and foresee risks using GRC solutions.
- Optimized Operations:
Investing in GRC aids in operationalizing procedures for allocating resources, resolving conflicts of interest, and monitoring objectives. Companies can use GRC to achieve their objectives, improve performance, address uncertainty, and boost ROI as risk management and third-party risks become more expensive.
2. Proactive Risk Management:
You can visualize, manage, and examine risks by implementing, automating, and managing them through a GRC program. Financial records, trade secrets, and client data are among the sensitive information that regulatory audits help to safeguard.
Companies that have experienced a risk-related incident or lack sufficient confidence in their current procedures can also use GRC technologies.
Fragmentation, inadequate integration, and information waste are just a few of the issues with governance, risk, and compliance. What makes implementing a GRC strategy imperative in today’s corporate landscape is that it allows organizations to recognize, address, and lessen these problems.
What are the Three Components of a GRC Strategy?
A GRC program is a three-pronged approach to deal with some of the biggest challenges the organization has to overcome to succeed in the long run.
Here are the three components of a GRC strategy:
- Governance
The regulations, operational procedures, and policies that direct an organization are known as governance. It starts with leadership and aids in directing administration and operations, morality, business risk management, compliance, and more.
Governance guarantees that the interests of all stakeholders are balanced and provides leaders with a framework to assist them in making decisions that align with the organization’s goals.
2. Risk
Risk describes the more routine technological procedures to control and manage risk.
This entails carrying out audits and assessments to keep track of risks in your business and with outside suppliers and vendors.
3. Compliance
Compliance refers to business actions to adhere to rules and regulations to operate lawfully and safely. This covers the due diligence needed for industry standards like PCI DSS, data protection laws like GDPR and HIPAA, and cybersecurity frameworks such as SOC 2 and ISO 27001.
What are the Different Levels of a GRC Maturity Model?
An open infrastructure GRC plan enables more effective external partner engagement and operational flexibility in global situations. Combining governance, risk, and compliance makes adjusting to the market’s changing demands easier. Before you implement your GRC program, it is important to evaluate and determine where you stand — with a maturity model.
- Siloed
Basic operations are the focus of the isolated stage, which has poor function coordination. While responsibilities relating to risk or compliance are given to the logical management team, these activities largely operate autonomously. Training and awareness-raising Within the concerned department are still behind closed doors, and vendors and business partners need more visibility into the risk and compliance processes.
The dependence on outside consultants or experts grows with the demand for formal governance. Any solution to satisfy GRC standards is likewise restricted to the operational procedure inside that function, launching the initial GRC domain expertise.
2. Preliminary
Organizations begin to integrate into the early stages, which helps to increase efforts inside functions. Coordination amongst functional heads aids in highlighting the advantages of GRC initiatives. This ultimately leads to applying the GRC awareness framework and a deeper comprehension of the framework.
It is not unusual to see a greater need for an organized follow at this point to deal with risk or compliance issues. Organizations standardize control-based procedures for prevalent problems to cut down on repetitious tasks.
The long-term plan develops as coordination efforts intensify. This long shift entails recording current tactics and tracking each function’s obstacles. Identifying the tools and technologies each group uses is important, and technological infrastructure should be compatible with shared rules and concerns.
3. Managed
Even while the managed stage shows a major improvement in operational efficiency, the management still faces several challenges. Teams are established at the managed stage to oversee the technological infrastructure supporting the GRC approach.
When these functions collaborate, a single source of truth for risk and compliance-related training and awareness is a crucial first step in creating a compliance culture.
Strategies from the previous phase take the shape of objectives, technical specifications, and resource needs. To achieve the bigger GRC objective and get rid of silos, you might analyze by functions.
Management and prioritization are essential to ensure appropriate execution as workflows get more complicated. Implement standardized metrics to track activities and determine objective completion.
Deleting fundamental tools like Excel sheets, an integrated GRC tech stack, and the technical team’s assurance of effective implementation are the final features of this level.
4. Transformation
The transformation stage is concentrated on enhancing cross-functional collaboration and is essential to ensuring that the organization is accomplishing the objectives of its GRC program. Management teams must focus more on tasks like project prioritization and technical coordination.
Accountability will increase as awareness and compliance are evaluated and integrated. There will be a change in how risk-related processes operate, and it will be defined using a common language. To find gaps, project metrics will be examined and tracked.
A well-run structure identifies the transformational stage, and it needs a controlled management program and an improved management mechanism for new requests.
5. Advanced
The GRC puzzles are completed at the advanced level when business goals, strategies, and objectives align with GRC procedures.
The workforce is educated and experienced in risk management. A centralized perspective of hazards is created because functions use a standardized approach for risks, controls, and assets, which aids in prioritizing work based on needs. Identifying, analyzing, mitigating, and monitoring risks helps in risk prioritization. Regular monitoring and planning to continuously enhance operations characterize this level.
What are Some GRC Best Practices Companies Can Follow?
You can implement a well-crafted GRC strategy using these best practices:
- Obtain the support of executive leadership: The C-suite is behind the most effective GRC tactics. Assign roles and responsibilities to ensure leadership is involved in the GRC strategy.
- Sort your GRC goals by importance: Understanding why you require a better GRC approach will help you define your goals, whether you want to decrease penalties or increase responsiveness to new requirements.
- Employee education on the value of GRC: To inform staff members of the benefits and procedures of the GRC approach and provide internal training.
- Look for comments: During the initial rollout, invite helpful feedback from all staff members to improve and adjust.
- Create a business case to demonstrate why you need a GRC strategy: Analyze the scope, expense, and operational advantages of a GRC program in addition to its short- and long-term value.
- Integrate IT into your GRC plan: Work closely with your IT team to develop and implement your GRC strategy.
- Pay attention to your competitors: To determine how your business compares to other industry leaders, benchmark it. Use examples of business leaders in the spotlight for making questionable compliance choices to teach your employees how to spot and prevent comparable risks. Encourage your team to participate in GRC webinars so they may learn about other people’s methods and tools.
- Modify your GRC strategy over time: To embrace a more proactive strategy for governance, risk, and compliance, automate and improve your GRC plan over time.
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