GRC (Governance, Risk, and Compliance):
The Definitive Guide

Governance, risk, and compliance – popularly known as GRC – is a set of processes and procedures to help organizations achieve business objectives, address uncertainty, and act with integrity.

The basic purpose of GRC is to instill good business practices into everyday life. While not a new concept, GRC has grown in stature as risks have become more numerous, more complex, and more damaging.

The acronym GRC was coined nearly two decades ago by OCEG as a shorthand reference to critical capabilities that integrate the governance, management, and assurance of performance, risk, and compliance activities.

GRC today spans multiple disciplines, including enterprise risk management, compliance, third-party risk management, internal audit, and more. While each discipline has its own priorities – and often its own way of doing things – GRC leaders are now recognizing the power of sharing data and intelligence to drive better results and build a stronger, more resilient organization.

Today’s risk landscape is more crowded, uncertain, and interconnected than ever. One risk – say a health and safety issue – can spill over to supply chain, business continuity, business relationships, IT security, workforce productivity, and more. At the same time, multiple forces are reshaping the risk terrain, including:

• Rising pace and scope of regulatory compliance
  Virtually every organization in every industry is facing an ever-growing and ever-changing number of regulations with which they must comply.
• Accelerating digitization of risk management
  The internet of things, third parties, blockchain … every new point of access adds vulnerability and increases risk exponentially.
• Growing importance of risk management in corporate strategy
  Risk management is increasingly viewed not just as a tactical function, but as a valuable part of corporate strategy.
• Evolving sophistication of analytics
  Better analytics are delivering new levels of insight for data-driven decisions.

The influence of social media, constant threats of cyberattacks, and demands for greater transparency also are amping up the pressure on executives and boards to make wise decisions about risk at an accelerated pace with little room for error. Senior leaders, in turn, are relying on an increasing number of stakeholders from all corners of the organization to identify, manage, and reduce risk.

To steer the organization toward success, leaders need to access facts quickly – and use those facts to inform their response. A comprehensive GRC strategy can pave the way by removing silos and building collaboration for faster, more accurate, and more coordinated action.

There are three main components of GRC:

• ► Governance — Aligning processes and actions with the organization’s business goals
• ► Risk — Identifying and addressing all of the organization’s risks
• ► Compliance — Ensuring all activities meet legal and regulatory requirements

In the past, organizations often approached governance, risk, and compliance as separate activities. Processes or systems frequently were created in response to a specific event – e.g., new regulations, litigation, a data breach, or audit finding – with little thought as to how that worked within the whole. The result was a tangle of inefficiencies, redundancies, and inaccuracies, including:

• Lack of visibility into the complete risk landscape
• Conflicting actions
• Unnecessary complexity
• Inability to assess the cascading effects of risk

The reality is that there is plenty of overlap between governance, risk, and compliance. Each of the three disciplines creates information of value to the other two – and all three impact the same technologies, people, processes, and information. An organization, for instance, might be subject to a new data-privacy regulation (a compliance activity), while also holding itself to certain internal data-protection controls (a governance activity), both of which help mitigate cyber risk (a risk management activity).

When the three disciplines of GRC are managed separately, there is substantial duplication of tasks. Multiple teams end up spending hours collecting the same data – and hours more untangling email threads and spreadsheets just to begin analysis.

More damaging, disconnected processes and lack of transparency leave the organization blind to insights and interrelationships between risks, undermining the whole system by allowing gaps and redundancies of controls to go unnoticed. Siloed teams also have no understanding of how their particular domain influences the company’s risk position as a whole or its overall success.

In short, managing GRC in separate silos is a lot of extra effort – and that effort produces very little reward. Without an integrated view of all GRC-related activities, it’s nearly impossible to identify issues and inconsistencies. A damaging risk can easily slip by undetected and unaddressed because you couldn’t gauge the full impact until it was too late.

Learn more about Transforming Compliance from Check-the-Box to Champion here.

Virtually every organization is engaged in risk management in some way, even if the risk management “system” is nascent. There is no single correct way to manage risk and compliance – but if your current system can’t keep up with changing business needs, it might be time to reevaluate your approach. Even a world-class risk management system may have room for improvement given the ever-changing risk environment.

Using a risk maturity model that assesses your GRC position is an excellent way to identify where you are now. You then can compare your current state to where you want to be – and evaluate that against the value and cost of further investment in the management of risk. The more mature your GRC program, the more effective you will be in making decisions, taking the right risks, and achieving better outcomes for the organization.

Where does your organization fall on the continuum?

Artificial intelligence has the power to transform nearly every aspect of business – including GRC. Machine learning has long helped analyze data and predict outcomes. But the introduction of generative AI – like ChatGPT – takes that power to a new level.

For GRC, AI presents new opportunities to automate, augment, and accelerate work processes. It can expand your abilities and reach by reimagining how work gets done.

ChatGPT and other generative AI tools are built on large-language models trained on massive amounts of text scraped from the internet to learn the patterns of human language. The data supercharges its capabilities, allowing it to analyze data, find patterns, and devise solutions faster than any human could.

The potential impacts on GRC are wide. Already, AI is assisting with testing controls, reviewing evidence, and documenting findings. Companies are asking how AI can make board reporting faster, easier, and better.

AI can extend the reach of GRC by making associated tasks easier and faster. AI can even reduce the steps needed in a workflow. With more automation, you have fewer manual interactions, and those actions combine into a stronger workflow.

Generative AI is best at generating content. With just a few prompts, ChatGPT can spit out a draft in a matter of seconds. That initial draft may not be flawless, but it can probably bring you about 50% – 70% of the way there. Then you can refine it with substance, tone, and voice to fit your organization.

Think of AI as an accelerator. It can simplify complex data, translate lengthy and technical information (like regulations) into plain English, and eliminate tedious manual work. However, you still must review the response, adjust it, and take it forward.

Clear GRC use cases for ChatGPT include:

• Risk statements and ratings
• IT product demand
• Policy drafts
• Control content
• Laws and regulations interpretation
• Potential controls
• Language translations

This list is just a start. AI could easily be used to draft business continuity plans or get started with third-party risk. The potential is almost endless. It’s all about understanding what you are trying to accomplish and where AI can provide a boost.
To be sure, generative AI is not without concerns. Everyone – from regulators to the inventors themselves – is trying to figure out the proper safeguards. Meantime, here are a few risks to watch out for:

Hallucinations – ChatGPT is programmed to provide a response, specifically the best next word in a sentence. In that process, it could make up the answer with no basis in fact. Always review and validate the response before you pass along information.

Bias – ChatGPT uses historical information to build new content. The problem is that what was acceptable in, for example, 1970, may not match today’s standards. And vice versa. Ensure the content generated by ChatGPT is relevant and appropriate for your question and for your organization’s policies and culture.

Data privacy and security – ChatGPT captures everything you type into the prompt and incorporates it into the model. Be cognizant of what information you are sharing outside of your organization. Protect yourself by defining proper use cases and your parameters for using them safely. ChatGPT also does not cite sources, making it difficult to verify the accuracy and reliability of the information provided.

Integrated GRC technology unites processes and roles across the organization for seamless collaboration and intelligent insights that support data-driven decisions. It breaks down walls and provides transparency among stakeholders so you can understand the connections between individual risks, as well as how everything comes together as a whole. And you get huge gains in efficiency and accuracy, while simultaneously reducing costs.

With GRC software, you can:

Get more done. Integrated GRC technology automates routine tasks, workflows, and follow-up, drastically reducing the number of human hours needed. And because all data is housed in one place for all to use, it eliminates double work, so you can double down on analysis.

Deal with endless change. At last count, more than 61,000 regulatory alerts from 1,374 regulatory bodies. Integrated GRC software is designed not only to efficiently keep up with new regulations and laws but stay a step ahead of your compliance risk and the impact on the organization.

See who did what when. Having all risk and compliance data in a single repository with robust tracking capabilities provides you with a clear audit trail documenting every modification.

Collaborate seamlessly. Integrated GRC software brings all corporate and legal policies, procedures, and enterprise risks into one place that’s easily accessible to all stakeholders. It breaks down silos by establishing consistent processes and controls across the organization. It also fosters a risk-aware culture and creates a sense of ownership where everyone plays a role in minimizing surprises.

See the big picture. Integrated GRC software allows you to connect initiatives and data to uncover real insights about how one part of the program affects another and understand the full impact on the organization. With better insight into your program as a whole, you can better identify, prioritize, and address issues before they escalate into full-fledged problems.

Answer tough questions. With streamlined processes, real-time data, and built-in analytics, integrated GRC software makes it fast and easy to create meaningful reports that inspire data-driven decisions. Dashboards give you continuous insight into the effectiveness of your programs. And advanced analytics augment human intelligence by pulling out new and more detailed information from the data. Having this level of insight also allows risk and compliance teams to offer strategic counsel and predictive insights to leadership.

Strong, technology-enabled GRC programs can be a real competitive differentiator for organizations, so making the right choice is essential. With multiple technology options and no common definitions, knowing when you need a GRC solution – or which one you need – isn’t easy.

Here are four questions to help define your focus when beginning the GRC software purchase process:

1. What problems are you trying to solve?

   What are your greatest concerns? Cyber risk? Trade compliance? Reputational impacts? Emerging risks?

   The first step in your GRC software purchasing journey is to understand your distinctive needs. It’s easy to get hung up on finding and buying the “best” and most feature-rich product on the market. But if these solutions don’t deliver the actionable intelligence you need to accomplish your goals, then they won’t bring the value you need.

2. Which features and functionalities are most important today?

   Do you need an ERM solution, plus an audit tool? Or ERM software with added compliance capabilities? What about analytics and reporting capabilities? Should you go the with a single platform with multiple tools for better collaboration – or look for separate point solutions for each function?

   With so many solutions on the market, questions inevitably arise around the right combination of tools, features, and functions. The best plan of attack is to separate the must-haves from the nice-to-haves. Look at what you need today and what you’ll likely need in the future. Buy the combination of tools that will deliver both the functionality you need right now and the scalability to carry you forward – within a reasonable budget.

3. Who should be directly involved in the purchasing process?

   Assemble a buying team based on three factors:

   • Who needs the software?
   • Who maintains the software?
   • Who controls the funds?

   .
   Involving too many stakeholders can lead to buying tools you don’t need or wasting money on multiple point solutions with overlapping features. You can’t please everyone, so focus on addressing the practicalities of those who have skin in the game.

   It usually makes sense for risk management to lead the charge. The risk management team typically has the most visibility into what features and functions will accomplish the organization’s priorities. This team also has the best view of how risk affects the entire organization and has the power to help everyone see and think about risk more uniformly.

4. Who should advise?
   Other departments and stakeholders get a voice, but not equal say. Internal audit, for instance, is a valuable advisor in the GRC software buying process. This department can verify that the solution under consideration has good controls, so the right people assess the right risks, and the information is reliable. Similarly, IT can offer important expertise around deployment, training, and integrations.

The best GRC solution enables organizations to understand what could happen and what can be done about it, so leadership can make fast and smart decisions to protect the organization.

Keeping up with constantly changing risks, regulations, and policies takes a GRC technology solution that’s flexible, scalable, and integrated. The right GRC software will add efficiency, prove effectiveness, and elevate the value of the risk management function to the organization. As you evaluate possible solutions, consider asking:

The success or failure of implementing GRC software rests largely on the strength of your partnership with your chosen vendor and how prepared you are in advance of the implementation. With that in mind, here are eight tips to put you on the path toward a successful software implementation:

1. Define the finish line before you start. Would you start a race without knowing where the finish line is? Of course not, since you might waste precious time and energy going in the wrong direction. Likewise, beginning a GRC software implementation project without clearly defining a finish line – that is, success criteria – can lead to delays, confusion, and scope creep. Start with well-defined business requirements that are fully aligned with your organization. Those requirements will drive the functional/technical specifications and user-acceptance testing criteria – and ultimately, will measure the success of your project.
2. Don’t automate a broken process. Comfortable as you may be with your current workflows, designing the new GRC system around the old ways is a costly – yet common – mistake. Heavily customizing new GRC workflows to mimic your old ones can have grave implications, including extended implementation timelines, increased scope, future supportability issues, and inability to use other core (or future) standard functionality. Vendors invest countless hours and dollars to develop configurable standards based on best practices, so be open to learning how these standards can meet your business requirements.
3. Communicate, communicate, communicate. Don’t assume the vendor will automatically know what you mean without you spelling it out. When it comes to a successful implementation, there is no such thing as too much communication. Discuss every possible issue in the early stages of an implementation – and don’t be shy about asking questions or voicing concerns. Even seemingly small issues can have a big impact on the success of implementation if they aren’t addressed until the later stages, or worse, not addressed at all.
4. Successful implementations are like a marriage. Just like a marriage, your company and the vendor both need to contribute for the union to be successful. Communication and trust are essential, both parties need to be held accountable, and it’s going to take hard work for the relationship to thrive. If one side hangs back on the sidelines, their needs may not get addressed properly, which can jeopardize implementation. And if the relationship gets too far out of balance, you could end up with a nasty divorce.
5. Yes, you do need a designated project manager. While an implementation can be successful without the PM role, your odds of success increase exponentially when a project manager is involved. Coordinating all resources and tasks during a large implementation can be an arduous task. Something as simple as scheduling a meeting for multiple people in separate organizations can prove difficult if the PM role is split between several implementation team members. Having a single point of contact centralizes communications, streamlines all implementation activities, and keeps everyone on track.
6. Be realistic with your other time commitments. Being part of an implementation team may be just one of many tasks on your plate. Be realistic about the time you have available to devote to the implementation process, and let the vendor – and team members – know about other commitments or conflicts you have as soon as the project schedule baseline is produced.
7. Don’t short-change the testing process. As tempting as it may be to speed up testing to meet your deadline, this is not the place to cut corners. Bypassing or condensing integral user acceptance testing can set you up for mountains of post go-live issues, extra work, and delays to your business processes. Proper UAT takes time to do correctly – but the extra effort will save you from plenty of headaches down the road.
8. Prepare for the unexpected. No matter how diligent you are, it’s virtually impossible to identify and prepare for every possible issue. Something unexpected is bound to happen, but the impact often depends more on how you react than on the issue itself. When an unexpected issue threatens to derail the implementation, work constructively with your team to tackle it head on and move forward. And if you chose the right vendor, together you can expertly manage whatever surprises come your way.

But what will speak loudest to leadership? No surprises, for one. There is nothing the board and C-suite loathe more than being blindsided by something they should have – could have – known about.

An integrated GRC platform puts all risks on your radar, which minimizes surprises. And then there’s visibility. With integrated GRC software, every risk is documented and presented within the context of other risks – as well as the organization’s goals.

Top leaders are well aware that the organization’s very survival may depend on their ability to get instant access to real-time risk data to inform hard strategic choices that will drive organizational success. And with a well-planned GRC strategy – supported by integrated GRC technology – you finally have both the visibility to see your risks and agility to dodge roadblocks to you can keep your destination routed straight to success.

Learn about Riskonnect’s GRC software here.