Estimated reading time: 4 minutes
Introduction
Governance, risk management, and compliance (GRC) are used in organizations to structure risk management processes and achieve compliance requirements.
This is a major pillar that helps accomplish the organization’s objectives.
GRC is a synchronized approach whose primary purpose is to effectively align responsibilities with corporate set goals, efficiently manage risks, and fulfill compliance regulations.
This article is designed to help you understand a bit more this topic, so let’s do a breakdown and define a few things first:
Governance
Governance is the process of planning strategies and executing them in a timely fashion. As the name suggests, this is how an organization is managed at all levels.
For instance, the procedures, mechanisms, and relations that ensure a smooth understanding and allocation of the various responsibilities within an organization are all accounted for.
Risk management
Risk management is whereby a company creates risk management plans to minimize uncertainties.
We note that every aspect of a business can be at risk; this can either be reputation risk, financial, health and safety, and so on. We also stress that it’s pretty much impossible to evade all threats.
The focus should be on the management of risks and understanding risk tolerance. Achieving success in business means knowing how to cope with risk.
Therefore, the firm creates a set of plans that will identify, examine, and give appropriate responses to potential threats.
Compliance
In compliance, we adhere to regulations, guidelines, and policies, internally and externally. Organizations must comply with the various rules and laws in place to ensure viability and longevity.
Managing and controlling risks is possible with GRC and the various levels of management must be fully onboard to have success.
The importance of GRC
An organization will require governance, risk management, and compliance to ensure their information is protected, that there exists cohesion in each department, and adhere to rules and regulations.
When done right, GRC can:
- Lower management costs
- Improve the flow and quality of information
- Elevate competence through efficiency
- Eliminate duplication of functions
Tools of the trade
GRC tools are used to help coordinate the various policies of an organization and there are special products available to aid with various compliance needs.
There exist tools that are cloud-based and readily available software. Some will focus on automating an organizations’ processes. Others will integrate enterprise-level multi-governance solutions.
Some packages include; IBM’s OpenPages platform, Rsam Enterprise, and Metric Stream.
Despite the availability of software solutions, a successful framework will only thrive if an organization’s leaders support cultural change.
An effective framework covers risk management, decision-making, compliance functions, portfolio, and resource management.
Benefits of a successful program
A well-planned program will improve the overall performance of an organization. Organizations will profit from an approach that will properly manage the various threats that may be encountered in daily activities.
The guidelines should always work concurrently with the company’s long-term vision.
This will boost safeguards in the organization and, chances are, accountability will be effectively implemented on work platforms through this medium.
A powerful GRC program will streamline risk control with policies and compliance obligations.
Businesses that implement a proper GRC approach will have quality communication and cohesive information flowing throughout the environment.
A well-implemented program can boost cooperation among management, internal audits, and compliance-based functions.
Simultaneously, the front-line administration tasks are made easier due to reduced overlapping of functions.
The GRC program’s value always seeks to improve the understanding of how the processes, issues, and risks are handled, and ensures the organization has much better control.
Ultimately, the organization responds quickly to any environmental changes, such as regulation, legislation, new products, and client requirements.
Challenges
There are numerous issues in organizations as it tries to link governance, control, and compliance. Implementing new regulations can be daunting if a company lacks a cohesive team that is willing to go the extra mile.
Moreover, lack of cohesion and consistency leads to a strained workforce.
Running separate software packages that do not integrate well with each other can only increase exposure to risk. And, a lack of clarity in discovering those issues in internal operations leads to ‘dirty data’.
Identifying and disclosing prevailing issues will help update the organization’s system. Introducing a GRC strategy may help manage your activities and better manage risks in all departments.
It will ensure that staff complies with rules and regulations at work.
Conclusion
The GRC model will help individuals understand how an organization will benefit from combining those three areas under that one discipline.
We hope this article has helped you to understand governance, compliance and risk management a bit better.
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