Best practices help companies operate more efficiently, maintain quality standards, and minimize exposure to risks. These are possible because industry best practices evolve in response to real-world challenges. The adaptive methods and preventive measures they recommend are shaped by painful disruptions and refined by decades of empirical data. The best of them – the ones that make a business resilient and competitive – are encapsulated in a unified framework called GRC.
GRC – Governance, Risk, and Compliance – is a rapidly expanding field with an ecosystem of its own and a market value estimated to reach more than a hundred billion dollars by 2027.
Many factors contribute to the rising demand for GRC services and solutions. At the basic level, companies seek GRC solutions to meet industry and government standards. But forward-looking organizations go beyond regulatory mandates and proactively partner with third-party GRC service providers because they know GRC is crucial to the operational discipline, sustained profitability, and overall security of their business.
Here’s a quick primer on GRC and how it can make a big difference for your company.
What Is GRC?
GRC stands for Governance, Risk, and Compliance. It is a unified framework that brings together the principles, practices, and processes that provide a structured approach for organizations to:
- Achieve business objectives with integrity.
- Manage uncertainty, threats, and risks.
- Meet the compliance requirements of their governments and respective industries.
Because it is built upon seasoned best practices, GRC can help companies make smarter decisions, improve efficiencies, protect their assets, reduce costs, and achieve good business outcomes.
What are the three components of GRC?
This component encompasses the corporate guidelines when it comes to strategy, decision-making, the pursuit of business objectives, and the relentless push towards the company’s vision. It includes the policies, functional roles, and operational controls that facilitate the prudent management of the organization as a whole, the cost-efficient administration of its individual departments, and the maintenance of cross-sectional synergies among these units. Finally, it also covers the level of corporate commitment to ethical expectations and social norms, especially when it comes to transparency, accountability, and sustainability.
- Risk (Management)
This GRC component refers to the systems and processes by which an organization handles the various risks it faces throughout its lifecycle. Such systems enable the company to detect, identify, analyze, and respond optimally to each internal or external threat.
- minimizing risks that threaten the sustained profitability, reputation or continuous operation of the company
- making the best of risks that provide a window of potential benefits to the organization — such as emerging markets, technologies, business innovation, and other risk-laden opportunities.
Potentially disruptive risks differ in nature, the most common of which are financial, legal, commercial, technological, and security. To date, one of the most critical risks all companies face is the rising incidence and severity of cybercrime, particularly data breaches, ransomware, and other malicious activities that threaten information security.
Common approaches to risk management include stoppage/containment, avoidance, or transfer of risks (via outsourcing, insurance coverage, and other methods). Many forward-looking organizations adopt enterprise risk management platforms and subscribe to managed security services to detect emerging risks early and minimize costs arising from such risks.
This component refers to the company’s adherence to
- its policies and thresholds
- the regulatory and legal standards mandated by relevant government institutions or jurisdictions
- the technical, procedural, or quality standards set by the specific industry or market within which the company operates.
At the basic level, compliance means adhering to stated rules, laws, and regulations. As such, keeping all contracts, policies, and compliance documents up to date is good practice in compliance management. So is the practice of ensuring proper controls are in place to keep the company aware and within the bounds of all those standard-setting documents.
Some well-known compliance regimes and industry standards include those that:
- focus on data privacy (such as the General Data Protection Regulation and the California Consumer Protection Act)
- protect personal health information (such as Health Insurance Portability and Accountability Act)
- help secure electronic financial transactions (such as The Payment Card Industry Data Security Standard)
Because navigating regulatory regimes can be challenging (and very costly in case of non-compliance), many organizations partner with third-party service providers specializing in detecting, remediating, and plugging compliance loopholes.
Why is GRC a Big Thing?
GRC has become big and buzz-worthy simply because it consistently delivers on its promises – year after year, audit after audit.
Whether the challenge is to comply with the regulatory standards of a new geographic market, develop business with new partners who demand adherence to specific technical requirements, or elevate corporate image by adopting an integrity-driven governance model, smart organizations will find many answers and practical insights in the field of GRC.
As a unified framework, GRC emerged in response to the unpredictable challenges organizations face as they navigate the fast-morphing terrains of business and technology. By the onset of the 21st century, for example, the rate at which companies can scale has jumped significantly compared to prior periods. And as companies scale, they likewise grow in complexity while their component units tend to operate as semi-autonomous bubbles.
Such a siloed operational environment becomes a breeding ground for inefficiencies, reduced levels of transparency and accountability, disjointed communication, inter-departmental conflicts, heightened security risks, and bloated expenses.
No one certainly wants any of that.
But those disadvantages, unfortunately, are just the tip of the iceberg. With the new imperatives for consumer protection, data privacy, business ethics, sustainability, and professional best practices, the needle has gone full swing towards more strident regulatory regimes and industry standards. Market regulators, consumer groups, and legislating bodies across the globe have all flexed their muscles to rightfully hold organizations accountable for every service or product they offer on the shelf – on top of the consumer data that are processed or stored by their businesses.
Meanwhile, as technology fulfills its core function as the ultimate enabler, it also exposes businesses to the unforeseen side effects of the advances and new capabilities introduced in its wake. For example, social media has greatly enhanced how people and organizations communicate. But it has also exposed businesses to a new kind of risk: the amplified voice of their customers that can ruin a brand, regardless of whether the brand deserves a backlash or not. The shift to digital has positively transformed the workplace. But it has also exposed organizations to various types of cybercrime, a few of which can cause significant disruption and damage.
GRC helps organizations address many of these challenges. While GRC does not function as the solution for most of the specific problems cited, GRC serves as:
- a preventive manual that describes the best practices for avoiding many of those problems; and,
- a platform where specific solutions are consolidated and prescribed.
But instead of presenting piecemeal solutions for each siloed department, GRC helps organizations approach and solve multiple problems in a coherent, holistic, and systematic manner. GRC achieves this by establishing a shared perspective and a tight, collaborative relationship among all stakeholders in the organization.
For new adopters, GRC almost always functions as a step change for the enterprise. For companies with a GRC platform and strategy, the persistent goal is to use GRC as a primary lever for continuous, calibrated improvement optimized for cost efficiency and impact.
Does my Organization Need GRC?
Regardless of their size or line of business, all companies that aim for excellence, growth, security, and sustained profitability need GRC as a guidepost for their daily operations and long-term strategy.
The only question is when. Amid the pace and intensity of competition and tightening compliance regimes worldwide, the worst answers are next year, soon, and later.
Without a strong GRC program, a company remains exposed to all sorts of risks and ill-equipped to capitalize on otherwise feasible business opportunities that lie outside its normal domain. No brand wants to be in the spotlight because of a data breach, fraudulent accounting practices, or substandard products. Such episodes will undermine just about everything a business holds dear: profits, reputation, customer trust, and shareholder support.
So, yes. Your organization needs GRC. Whether a mid-scale or a small business, you’ll need a unified framework to help your leaders consistently make smart decisions, avoid disruptions, and optimize opportunities. Remember, less capitalized companies must have a strong GRC program because such companies have lower chances of surviving massive GRC-related disasters compared to enterprise-scale organizations, almost all of which already have formidable GRC infrastructures in place.
On the upside, a company known to have a rigorous GRC program guiding its processes and policies inspires the confidence of its peers, partners, competitors, and customers. If you also want that perk, then your company needs GRC.
What Benefits Can my Company Get from GRC?
A well-developed and properly rolled out GRC program provides a company many advantages. Here are some of its most compelling benefits:
- It makes achieving business goals more systematic and less difficult.
- It establishes a culture of continuous improvement and collaborative excellence.
- It improves leadership effectiveness across the different units of the organization.
- It institutionalizes accountability, transparency, ethical behavior, and top-quality management practices.
- It minimizes exposure to and impact of many types of risks, including financial uncertainty, natural disasters, and cybercrime.
- It enhances corporate image among peers, vendors, potential partners, and customers.
- It equips stakeholders with relevant data and adequate oversight to make sound decisions regarding challenges and effectively address major incidents.
- It helps drive employee engagement and communication, leading to better service delivery across the board.
- It facilitates consistent compliance with relevant government legislation, industry mandates, and business standards.
- It saves money by helping ensure adherence, avoid penalties for non-compliance, and minimize costs related to cybercrime.
- It strengthens business stability and resilience.
Is there a correct and a wrong way to go about GRC?
Yes. There are things you should and shouldn’t do when planning and rolling out a GRC program.
If done right, a GRC program helps establish and maintain the right objectives, processes, and controls to keep your company headed toward organizational success. On the other hand, a poorly mapped and deployed GRC program will spawn more complexity, resource waste, and greater risk.
Take these steps first:
- Define clear goals for the GRC program you envision.
- Practice due diligence when deciding which GRC partner, platform, software, and other resources to adopt. Treat your decision as an investment and approach the matter within an ROI context.
- Secure executive support and funding for the GRC program. Establish the business case by using ROI simulation data.
- Secure support from the rank and file, aiming for quick adoption at the onset and cultural transformation over the long term.
- Establish stakeholder roles and accountability.
- Set and monitor KPIs to track the program’s performance. Be ready to recalibrate or manage change if the program is underperforming.
Avoid taking these actions:
- Hinge GRC planning and development on baseless assumptions. Do the homework and let real-world data guide decisions.
- Adopt a GRC solution based on mere popularity. Find the right fit specific to your business.
- Treat GRC as three separate entities. Yes, they are different, but they also overlap. Treating them separately will lead to compounded expenses, task duplication, and disjointed efforts.
Which GRC tools should I consider to ensure the best outcome for my company?
Many resources can help organizations formulate effective policies, manage risks, and ensure compliance with all relevant standards. Many of those resources have the following capabilities and features:
- KPI dashboard
- Document management
- Workflow management
- Compliance monitoring
- Audit management
Good GRC tools give organizations an overview of their governance, risk management, and compliance posture. However, they also need to provide detailed perspectives that map current efforts with known risks, regulatory requirements, industry standards, and public expectations. Such tools help evaluate the effectiveness of mechanisms and controls that are in place to help keep operations functioning properly and operational costs at a minimum.
Some GRC resources enable stakeholders to stay updated about the changing regulatory and cyber security environment. Most tools also allow different business units to collaborate using the same GRC platform while sharing a singular and unified version of the truth.
That said, there is no one-size-fits-all solution. Nevertheless, each company has unique GRC requirements, and it is incumbent upon the GRC coordination team to map their GRC objectives with the appropriate consulting partners, vendors, and solutions in the market. Creating a shortlist of flexible and positively reviewed solutions (such as Hyperproof) is a good way to start.
What is the first step I should take to help my company to accept and thrive with GRC?
Find a GRC partner.
Because GRC is a strategic investment that futureproofs your company, partnering with the right GRC specialist is a crucial step any organization focused on stability and sustainable growth will need to take. Using an independent audit, a GRC specialist can help you determine your exact GRC requirements and produce expert recommendations on which software, processes, tools, and other resources will help plug the holes in your governance, risk management, and compliance programs.