A house without rules is a messy house.
Picture this, you report to work, and 100 of your employees' computers are non-responsive. There is no system in place, so they all call you to report the incident or try to fix the problem themselves.
We can all agree that it will be a very long and unproductive day.
Now picture this, you report to work, and 100 of your employees' computers are non-responsive. However, you have a system on what employees are expected to do if this happens.
The second option saves you time and ensures your business's daily operations, goals, and objectives aren't disrupted. This is what a governance, risk, and compliance program does for you.
What is Governance Risk and Compliance (GRC)?
GRC is a system or a set of processes designed to help an organization make better goals and strategies, address a business's uncertainties, and meet compliance requirements. The purpose of GRC is to align business goals with IT.
These objectives improve daily business operations by reducing noncompliance risk, reducing waste, increasing efficiency, and improving communication.
Let's break down the three main parts of GRC and what they mean.
Governance involves aligning a business's processes and actions with its goals and objectives. It mainly focuses on an organization's key decision-makers, such as high-level executives and board members.
The main components of good governance include:
- Transparency when sharing information
- Resource management
- Ethics and accountability
- Conflict resolution policies
2. Risk Management
Running a business involves legal risks, financial risks, vendor risk, commercial liabilities, management errors, accidents, and natural disasters. Risk management helps identify, access, and control these threats. Practicing risk assessment helps implement data protection into your business processes.
Risk management relies on internal audits and risk assessments to help identify pitfalls and develop viable solutions. The risks can be external or internal, so an organization must work with different parties, including finance officers, business analysts, and IT security leaders, to develop an effective GRC framework.
GRC compliance ensures an organization's activities align with the law requirements and regulations. Compliance management in every industry has legal and regulatory requirements that companies have to adhere to. For example, if your company has a construction, it's important to ensure your site doesn't violate environmental code violations.
Why is GRC Important?
When GRC is implemented effectively, it can help an organization make informed decisions and mitigate risks that can lead to reputation, legal and financial risks. GRC also ensures the company is on the same page regarding its actions, decisions, and policies to avoid operational risk.
Here are some of the benefits of implementing GRC.
1. It Enhances Transparency in a Business
Governance, risk, and compliance help a business achieve a productive environment where everyone works towards similar goals and objectives. This helps the security department to detect potential risks early and prevents them from disrupting an organization from its business objectives.
Since GRC is integrated, it ensures everyone in the company is in the know of any cyberattacks and their consequences, which makes everyone vigilant in preventing their occurrence. GRC implementation helps avoid all types of risk in business processes.
2. It Reduces Business Costs and Enhances Performance
Another benefit of GVR is reducing time and resource wastage in an organization. It allows management to spot and eliminate non-value activities in a business. For example, manual preventative controls can be replaced with automated detective controls. This ultimately enhances business performance while reducing expenses.
3. It Protects a Company's Reputation
Enterprise risk management is a major part of GVR. It ensures that a business's reputation stays intact by managing any threats before they cause any damage. Compliance management also ensures that a business follows all legal protocols to avoid any scandals that might lead to customer trust issues.
4. It Improves Cybersecurity
With an integrated GRC approach, a company can easily implement its cybersecurity policy to ensure company and customer data doesn't end up in unauthorized hands. This is crucial, especially with the increased risks of cyberattacks. It also helps organizations comply with data privacy regulations, including the General Data Protection Regulation ( GDPR). A GRC IT strategy can help protect your business from penalties and build customer trust.
How can Companies Use Technology to Improve their Governance Risk and Compliance?
GRC software streamlines and automates all your strategies and processes associated with your governance, risk, and compliance framework. Technology can improve your GRC and enhance its performance. Here are a few ways GRC software can benefit your business:
1. Automating Workflows and Getting More Done
GRC technology can automate repetitive tasks, which can save time and reduce errors that cause business money.
For example, let's say you're surveying all departments. Instead of having different manual systems to hand over the question and collect responses, you can have one system. All managers can log in and submit all their answers directly to the system.
Every board member can then access the documents once they're uploaded. Doing so saves time and avoids errors that could have happened during data collection and transfer. This also saves money because there is no need for an auditor to file all the data manually.
2. Centralized Tracking to Keep Up with Compliance Requirements
Compliance requirements change and evolve every day. GRC technology can help track all the litigation and assessments under one cloud. You can get notifications to deliver and update legal and regulatory requirements on one screen. This ensures that you keep up with all the legal updates in the industry and reduces the turnaround time.
Centralizing tracking also allows the risk management and compliance department to focus on other crucial matters.
3. Data Analysis to Understand Different Business Departments
An integrated GRC gives you a glimpse of how one program affects other parts of your business. With these insights, you can identify, prioritize and address the issues before they affect business performance.
This alone is a huge benefit because even one tiny change in a system can affect the business's overall performance.
For example, you can observe that when employees report to work, the sign-in process takes a lot of time, which delays how fast they settle in. Changing the sign-in system can ensure employees sign up faster and get started with their duties earlier, improving the working environment by making mornings less frustrating for your team.
4. Create a Clear Audit Trail
A good GRC makes it easier to see who did what and when by providing a clear audit trail, showing every modification. This is possible because GRC technology has robust tracking capabilities.
Access to the audit trail allows you to hold everyone accountable for their mistakes, know where training is necessary, and ensure no one is tampering with sensitive company documents.
5. Centralized Storage for Safety and Easy Access
Modern solutions allow you to store important data in one cloud. This makes it easy for decision-makers to make informed decisions because they have access to all data – present and historical.
Having centralized storage can also make recruitment and transitioning to a new role easier because all information of every department is available with one click.
How can Companies Evaluate and Measure their Governance Risk and Compliance Program?
Your GRC technology needs to be flexible and adaptable to keep up with the ever-changing regulations, policies, and risks. A GRC software should add to the effectiveness and efficiency of your GRC framework.
Here are factors to consider when evaluating your GRC program:
1. Use friendliness
A good GRC should be easy enough to encourage everyone to engage with it. Regardless of how well-designed software is, it's useless if no one can figure it out.
Thanks to technology, many roles can be done virtually, making collaboration easier and allowing employees flexibility. Your GRC should be accessible from any location using a phone, tablet, desktop, or laptop to support this trend.
Your program should be safe enough to protect data with high-end security and ensure you're compliant with privacy data and compliance laws.
A good GRC should be constantly reliable in terms of accessibility and offering solutions. Users should be able to get any answers, queries, or analytics they need at any given time without delays.
Your software should have effective solutions to automate workflows, alerts, assessments, attestations, and action plans. This allows risk and compliance to focus on other crucial issues.
6. Ability to update the system
Your GRC program should be easy to make changes and update. It should be possible to customize page layouts and modify configurations to accommodate new requirements and regulations. All these should be possible without involving the software vendor.
7. Ability to customize dashboards
Dashboards should be customizable for everyone. This allows every employee to keep tabs and prioritize the activities they care about. It can also allow employees only to receive notifications that require their attention.
This is one of the most important aspects of any GRC. Your program should be able to integrate all your systems to show how every department affects the business in general. For example, a GRC should be able to integrate all risks ( third-party risk management, compliance, enterprise risk, and internal audit) to gauge the cumulative risk and come up with effective risk management strategies.
How can Businesses Ensure that their Employees Understand and Comply with Governance and Compliance Policies?
Here are some tips for getting your employees to understand and comply with GRC policies.
1. Explain the "Why"
Don't just ask your employees to adhere to policies with zero explanation. Explain why these policies are important, how they impact the organizations, and the consequences of not implementing them. Research has shown that employees are likely to perform better and be responsible when they have a sense of belonging.
Instead of telling them not to leave their computer unlocked, telling them to leave their computers unlocked can lead to unauthorized personnel accessing private files, damaging the company's reputation.
2. Document All the Policies and Procedures
After explaining the importance of implementing compliance policies, you want to ensure all employees know their role in implementing the GRC program.
Ensure you simplify the policies as much as possible to make them easier to read and remember. Remember to update the document every time something changes in the organization.
3. Offer Training
It's important to ensure your employees understand and can use the GRC program.
Provide learning material and sufficient time for employees to learn and adapt to a program. Encourage them to ask questions and set a "catch-up" day for the first months to check how everyone is fairing with the program.
The easier a program is to operate, the higher the engagement.
4. Establish a Reward System
Research shows that employees are likely to perform better when they're recognized and rewarded for their contribution.
Encourage your employees to embrace the GRC program by appreciating their efforts. These rewards can be individual or departments to encourage teamwork and accountability.
5. Audit the GRC Regularly
It's important to check in with your employees every once in a while to see how the program works for them. Take this chance to discuss the system's effectiveness—and add necessary policies. Similarly, don't shy from removing policies that no longer contribute to the company's goals and objectives.
Time to Setup your GRC and Implement It
Systems are important in keeping order in a business, so you need a governance, risk, and compliance program. The latter ensures that everyone in a company is caught up on what's expected of them.
A GRC also ensures that the daily operations of a business run smoothly, even on the most chaotic days. This is because even under an attack, a GRC outlines the measures employees should take to mitigate and reduce impact.
In all said, a GRC keeps everything organized.
Did you find this guide helpful? If yes, check out our blog for more insightful guides on risk management.