February 12th, 2021 Read Time: 7 minutes
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Governance, risk management, and compliance (GRC) is the umbrella term covering an organization’s approach across these three practices. It allows entities to manage and integrate regulated IT operations. These software solutions effectively combine the different applications that manage GRC’s core functions on a single integrated package.
Innovations in disruptive technologies like artificial intelligence, alongside a growing focus on real-time decision making, risk-awareness, integrity, and culture, continue opening up diverse challenges and opportunities for GRC functions. In turn, this adds greater value to your organization.
According to the WSJ, up to 50% of an organization’s total workforce is outsourced. The rise of the cloud, especially in the wake of the pandemic, has led to the emergence of more third-party vendors and outsourcing of non-core business functions. While utilizing third-party vendors allows businesses to focus on core capabilities, it raises many privacy and security concerns, which is why businesses should be focusing on GRC software now more than ever.
Governance, risk, and compliance (GRC) refers to the various tools, strategies, and processes by which a company manages its internal administration, business risk management, and industry regulation compliance. GRC can also be described as a structured methodology of aligning your business IT infrastructure with the company goals while effectively handling risks and staying compliant.
The framework varies intensively across organizations based on the data to be protected, probable risks, and the various regulations governing your business model and industry structure. All these factors significantly influence your company’s GRC strategy.
GRC (Governance, Risk and Compliance) software is made to ensure your day-to-day business processes are compliant, and this is achieved by automating routine compliance processes and audits. As a result, it lowers the risk of malicious activities or fraud in both ERP (Enterprise Resource Planning) and SAP systems.
These efficient solutions come in handy when you need to facilitate or automate how you deal with GRC. They are more effective than manual GRC management alternatives. Even if you did the manual process recently, it’d still be hard to align with risk management and compliance through legal pads and spreadsheets.
The software also comes in handy in monitoring access and user privileges. It alerts the administrators whenever a user’s actions or access level violates compliance requirements. You can also use this software to generate reports that facilitate risk analysis, auditing, and other vital GRC processes.
GRC software’s ultimate objective is to achieve a controls repository. It’s an excellent reference point for your company’s compliance team and can effectively demonstrate the business’ progress in fooling the documented procedures and policies.
From the name, the primary components of a practical GRC security framework fall under three main categories: Governance, Risk, and Compliance. Here’s a coverage of the leading elements in each of a GRC software’s categories.
This GRC component covers how your company is governed – from the top executives to the lowest level. The typical elements in this category include:
Corporate Management: This component of your GRC approach examines the organization’s relationship structure and how teams work together to achieve seamless communication and optimal efficiency.
Strategy Management: This facet examines the company goals and the responsibility of each team member. As such, the duties and roles will align with the company objectives, and everyone will know the part they play and why they’re doing it.
Policy Management: Does your company have standard procedures, processes, or policies that govern people’s roles and responsibilities? Policy management ensures consistency in all operations, which leads to consistent results for everyone.
This GRC software component involves classifying, evaluating, and managing different risks that the company faces in its daily maneuvers. Identifying those with the highest occurrence likelihood and the most significant impact helps you prioritize the most effective security approaches at the lowest possible cost. Its primary components include:
Risk Identification: What risks does your company face every day and the attacks or accidents that are likely to occur? To get the right answer, you need thorough processes and assets inventory and relevant information about these threats.
Risk Assessment: After you’ve identified the risk that you’re likely to face, you’ll proceed to rank them based on their impact and likelihood. This helps you address those with the most significant impact and probability. As such, you’ll get the most significant ROI from a minimal cybersecurity investment.
Risk Management: With the different risks classified based on impact and likelihood, you’ll be ready to take the necessary risk mitigation steps. This may involve acquiring advanced network security solutions, creating awareness programs, and coming up with new security procedures or protocols.
Compliance management is the GRC component that focuses on addressing the appropriate measures that ensure conformation with industry requirements. Compliance management covers information security standards and procedure- and process-oriented standards. One of the key objectives is avoiding the penalties and censure resulting from noncompliance.
Its primary components include:
Internal and External Audits: Companies need to run regular internal audits to point out any potential compliance issues. It would also help if you worked with external auditors for objective reports of the organization’s compliance issues.
Compliance Research: Compliance management also involves extensive research to determine the different standards that apply to your organization or industry. External auditors can offer lots of industry insights, but it’s also essential to consult with local authorities and legal counsel to know the applicable federal, state, or local regulations.
Security Controls and Procedures: Most compliance standards come with stringent requirements on the security controls and techniques you should use. As such, it’s crucial to identify and implement the controls.
Compliance Reporting: Creating the appropriate documentation to prove that you’ve taken the proper measures to comply with industry standards is vital, but most people miss the point. Most compliance standards have strict reporting and documentation requirements, and you may still face penalties if you fail to submit proper documentation. This can happen even if you’re following the appropriate guidelines, so you must ensure precise compliance tracking and reporting.
GRC software helps you address all the components of governance, risk, and compliance. As such, your company is likely to enjoy the following benefits:
Strategic decision-making – GRC software integration allows for a detailed view of the company’s risk landscape. The holistic perspective helps create decisions that align our operations with your goals and performance.
No data silos – By sharing data across departments, business units, and functions, you’ll achieve better visibility, understand the controls and risks and enhance data access and reporting.
Enhanced cross-functional communication – Sharing business data between departments enhances communication and data sharing, ensuring the different units collaborate to meet company objectives.
Streamlined management – GRC software simplifies daily GRC management and reduces the resource and time requirements while minimizing human error.
A more agile team – Combining data analytics and reporting on one platform lets you analyze the known risks and opportunities efficiently.
GRC has a holistic future that should be fully integrated into a company’s operations, culture, and policies. As such, it is important to ensure you pursue tools that offer GRC functionalities at an easy-to-consume and straightforward level for business professionals and company management— it’s critical to get it right to ensure you use your GRC software optimally.