The digital age in which we operate today has radically changed our perception of boundaries, be it social, personal, or professional.
Growth expectations from business and the overall economy have intensified, business cycles are faster, newer technologies are invading the market at an alarming regularity, third-party relationships are getting complex, and regulations and compliance enforcements are getting stringent. In this dynamic scenario, successful execution of an organization’s business strategy involves balancing operational efficiency and revenue generation while managing risk effectively.
What is GRC?
GRC Tools – Governance Risk & Compliance, thus, evolved from ‘nice to have to ‘must have’. In order to remain competitive, one needs to continuously monitor technological advancements, changes in business ethics, structure, and evolving regulations as well as compliance needs and risk mitigations as an owner/shareholder of any business providing services/products today. A GRC system enables an organization to monitor business activities, new contracts and engagements, customer relations, management decisions, investments, and investor portfolios.
An organization’s ability to maintain an integrated GRC approach is impacted by the complex multidimensional changes in business environments. In many organizations, GRC efforts are viewed as reactive to regulations and risk events and do not have a well-defined program. To comply with regulatory requirements and protect the organization and its stakeholders from potential losses, they create an ad hoc GRC program.
In a world where we expect vital data and information to move seamlessly whenever needed, many business leaders neglect GRC and view it as a necessary evil. GRC programs should be well-defined, proactive, and integrated in order to maximize business performance while facilitating risk management and compliance.
Increasing GRC’s value from being a protection enabler to becoming a direct enabler of business performance is imperative in today’s business environment. A well-positioned GRC program protects and enables business performance, increasing both savings and performance. Implementing a holistic GRC program is far less expensive than not doing so.
A GRC journey or a GRC journey in progress requires organizations to evaluate their GRC strategies and think about how to create resilient enterprises consisting of processes, people, information, and technology. The following are critical to enabling a successful GRC transformation to help improve business performance:
An Integrated Risk Management Approach
Organizations traditionally focus their GRC activities on financial, tactical assets, and regulatory compliance. Prior to aligning functions, which integrated GRC advocates, Organizations need to understand their risk types, broadly categorized as preventable, strategic, and external. It is possible to design risk responses and control models once risk types are understood.
Effective GRC programs anticipate, respond, and continuously adapt to risks, but internal control, compliance, and audit functions are not aligned with strategic risks and performance metrics. It is also imperative for the top management to own the process of identifying, managing, and monitoring overall risk to the organization.
An integrated approach helps organizations achieve compliance objectives, manage regulatory changes, and align GRC initiatives with business objectives. Identifying and driving process improvement opportunities is easier with a better understanding of risk drivers and impacts.
Organizations continue to invest in new technologies and techniques to improve processes that manage tactical, operational, financial, and compliance risks.
A comprehensive risk governance model is essential to ensure a balanced corporate risk strategy and clear responsibilities for risk ownership to enhance decision-making and avoid redundant costs.
The following core risk strategy components are critical:
- Enterprise-wide risk and control governance model
- Risk-building modules focused on risk identification, assessment, strategy, and governance
- Convergence of GRC functions and activities
Organizations with successful GRC programs continue to grow by aligning their GRC functions; they align their cope and mandate, coordinate infrastructure and people, and leverage consistent methods and practices.
Embracing technology for GRC transformation
Providing one risk management language, consistency, and integration through GRC technology solutions is critical to effectively and efficiently executing GRC processes. However, most organizations continue to underutilize them. GRC tools were traditionally used by companies as a quick fix for an immediate issue; for example, implementing a “segregation of duties” monitoring solution in response to an audit finding. Therefore, broader applications of GRC tools and return on investment analysis were not always considered, limiting their applications.
GRC technology is essential to executing processes effectively and efficiently for most big organizations. Through automation and centralization, GRC technologies can drive optimization and standardization for GRC transformation.
Opportunity and enhanced performance:
As long as GRC is fully integrated and synthesized for greater efficiency, it will always help drive a business forward. Integrating GRC activities with key business performance drivers and strategic priorities will help organizations maximize their GRC programs. A company will not achieve GRC optimization unless it gets embedded in its mission, people, culture, and day-to-day activities across functions.
By enhancing collaboration between each GRC activity within an organization, an optimized, integrated, forward-looking GRC program can be developed. Opportunities exist to transform the existing GRC programs into a more relevant ones while improving ROI and leveraging GRC’s role in making a business stronger.
Some organizations are achieving successful results by focusing on
- Changing the risk management focus to a cross-functional approach aligned to strategic risks and business performance measures
- A holistic view of risk and compliance exposure
- Automating and standardizing GRC processes to enhance decision-making and avoid unnecessary costs
- Generating real-time control intelligence
- Embracing GRC technology to execute processes effectively and efficiently