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Governance, Risk and Compliance: Getting it Right

What is Governance, Risk and Compliance?

Governance, risk and compliance (GRC) aims to address an organization's strategy for integrating these three components in an effective way. GRC aligns corporate governance, enterprise risk management (ERM), and compliance activities to help organizations achieve their goals. Any organization, from small-to-medium business (SMB) to large enterprises can implement GRC.

A GRC strategy provides organizations with a set of practices across the three fields:

  • Governance practices are focused on how the organization is managed by its leaders.
  • Risk practices focus on reduction of the risk that can interfere with the organization’s operations.
  • Compliance practices focus on improving the level of compliance with regulations, standards or business practices.

In this article, you will learn:

Why is Governance, Risk and Compliance Important?

A well-designed and structured GRC strategy enables organizations to effectively manage risk and meet compliance requirements, while aligning IT with business objectives. This has many benefits, such as simplifying the decision-making process, maximizing IT investments, and reducing the gap between IT departments, experts and stakeholders.

Many organizations start from an existing GRC framework, rather than building their GRC implementation from scratch. A GRC framework provides basic elements that organizations can configure and adapt to their specific circumstances. This makes it possible to organize and manage IT initiatives while ensuring compliance, managing risk, and supporting the organization's short- and long-term goals.

The OCEG Model for Implementing GRC

GRC is most effective when implemented across an entire organization. In some types of companies, there is a need for an umbrella entity that facilitates coordination on GRC topics across the organization, but this is not always needed. 

The OCEG, a non-profit organization that invented the GRC concept, provides a GRC Capability Model (known as the Red Book) that integrates management considerations, risk, auditing practices, compliance, ethics and culture, and information technology, using an integrated approach.

The model uses four components:

  1. LEARN—understand the organization's experience, culture, and key stakeholders, and define goals, strategies, and activities.
  2. ALIGN—identify desired actions by making effective decisions to reflect the values, opportunities, threats, and needs of the organization.
  3. PERFORM—execute the desired actions, stop and fix actions that are not desirable according to previous stages of the model.
  4. REVIEW—analyze the effectiveness of the strategy and actions taken, and continuously optimize the objectives to the company’s current situation.

These components describe an iterative process of continuous improvement. Each part of the model is broken down into elements, each of which provides a series of practices, activities, and controls, which may be either (a) proactive, (b) detective, or (c) responsive.

What is GRC Software?

If your organization already has solid policies and procedures, investing in a GRC solution can significantly improve performance, decision making, and risk awareness. It can help execute the GRC model in a standardized way across the organization.

GRC software can help an organization implement a GRC program by:

  • Improving flexibility—provides the data you need to analyze risks and opportunities, makes it easier and more efficient to launch new products and services, hire new suppliers, or respond to market changes.
  • Eliminating data silos—facilitates data sharing between business units, departments, risk management and compliance functions, and allows for more accurate risk assessment.
  • Simplifying risk and compliance activities—automates manual steps and repetitive processes. GRC plans can be implemented in days or weeks instead of months or years by leveraging automation. A consistent GRC structure also simplifies day-to-day administrative tasks, reduces time and effort and minimizes human error.
  • Monitoring deviations from GRC strategy—automated risk and compliance monitoring helps organizations prepare for the future and take action. GRC monitoring can assure you that the organization is line with the GRC strategy. It can also create an inventory of critical business data and manage access to it via internal users or third parties.

Considerations when Evaluating GRC Tools

With the increasing number of regulations, particularly for financial services companies, GRC tools have become essential for creating and processing reports required by government agencies. Most products provide a dashboard that allows you to quickly see which parts of your organization follow certain standards or rules.

Many risk and IT managers use simple spreadsheets to perform GRC analyses, such as tracking risk and compliance with security policies. However, this is not sufficiently scalable or reliable.

A better way is to use an automated GRC assessment tool that collects information from existing IT security tools (firewall configuration logs, vulnerability scans, customer databases, and so on). Compliance auditors or consultants can use these tools to identify gaps, and address them to improve compliance and reduce risk.

Before evaluating GRC automation tools, answer a few questions to help you understand their capabilities and how they align with organizational needs.

How are existing security systems integrated with the GRC tool?

Some tools have connectors that allow you to download scans and reports directly from security tools, while others might require you to import the data using XML, CSV files, or SQL queries.

Is there a common framework to identify threats across departments?

If multiple departments are conducting competitive, compliance or security risk assessments, there may be common causes or issues that can help multiple departments address a risk. This can save time and improve the effectiveness of the GRC process. Check if the GRC tool provides a common framework for identifying and addressing risks across the enterprise.

How flexible is the reporting functionality?

Each company requires specific reports, both for internal use and for submission to external auditors. Check what are the built-in reporting tools and how deeply you can customize them to generate reports you can submit to stakeholders and auditors.

How many ready-made templates are provided?

Some GRC products use forms and requirements from common standards and regulations, and build them into the product as a template. Check if templates are available for the specific compliance standards your organization is subject to.

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Senior Marketing and Strategy Manager