GRC Latest 2022
What is GRC?
GRC is the integrated collection of capabilities that enable an organization to reliably achieve objectives, address uncertainty and act with integrity
GRC as an acronym denotes governance, risk, and compliance — but the full story of GRC is so much more than those three words.
The acronym GRC was invented by the OCEG (originally called the “Open Compliance and Ethics Group”) membership as a shorthand reference to the critical capabilities that must work together to achieve Principled Performance — the capabilities that integrate the governance, management and assurance of performance, risk, and compliance activities.
This includes the work done by departments like internal audit, compliance, risk, legal, finance, IT, HR as well as the lines of business, executive suite and the board itself.
While the acronym was used as early as 2003, the first peer-reviewed academic paper on the topic was published in 2007 by OCEG founder Scott L. Mitchell in the International Journal of Disclosure and Governance. This groundbreaking paper influenced an entire industry of software and services.
This was the beginning of open source GRC standards.
Organizations must address today’s challenging business climate. Even small businesses, nonprofits, and government agencies are facing issues that only large companies had to face in the past. Think of how many of these factors you have to deal with:
1-Stakeholders demand high performance along with high levels of transparency
2-Regulations and enforcement are ever-changing and unpredictable
3-Exponential growth of third-party relationships and risk is a management challenge
4-The costs of addressing risks and requirements are spinning out of control
5-The harsh (and scary) impact when threats and opportunities are not identified
GRC Done Right
Integrating GRC capabilities does not mean creating a mega-department of GRC and doing away with decentralized management. Nor does it call for the use of only one GRC software system to manage it all.
Rather, it is about establishing an approach that ensures the right people get the right information at the right times; that the right objectives are established; and that the right actions and controls are put in place to address uncertainty and act with integrity.
When GRC is done right, the benefits accrue. Organizations that integrate GRC processes and technology across all or many silos have:
Reduced duplication of activities
Reduced impact on operations
Achieved greater information quality
Achieved greater ability to gather information quickly and efficiently
Achieved greater ability to repeat processes in a consistent manner
With the help of a panel of 100+ experts, OCEG studied 250+ organizations to document best practices in the GRC Capability Model (commonly called the OCEG Red Book)
Unified vocabulary across disciplines
Defined common components and elements
Defined common information requirements
Standardized practices for things like policies and training
Identified communication for everyone involved; including strategic decision-makers.
What does GRC stand for?
GRC stands for governance, risk (management), and compliance. Most businesses are familiar with these terms but have practiced them separately in the past. GRC combines governance, risk management, and compliance in one coordinated model. This helps your company reduce wastage, increase efficiency, reduce noncompliance risk, and share information more effectively.
Governance is the set of policies, rules, or frameworks that a company uses to achieve its business goals. It defines the responsibilities of key stakeholders, such as the board of directors and senior management. For example, good corporate governance supports your team in including the company’s social responsibility policy in their plans.
Good governance includes the following:
- Ethics and accountability
- Transparent information sharing
- Conflict resolution policies
- Resource management
Businesses face different types of risks, including financial, legal, strategic, and security risks. Proper risk management helps businesses identify these risks and find ways to remediate any that are found. Companies use an enterprise risk management program to predict potential problems and minimize losses. For example, you can use risk assessment to find security loopholes in your computer system and apply a fix.
Compliance is the act of following rules, laws, and regulations. It applies to legal and regulatory requirements set by industrial bodies and also for internal corporate policies. In GRC, compliance involves implementing procedures to ensure that business activities comply with the respective regulations. For example, healthcare organizations must comply with laws like HIPAA that protect patients’ privacy.
How does GRC work?
GRC in any organization works on the following principles:
GRC requires cross-functional collaboration across different departments that practices governance, risk management, and regulatory compliance. Some examples include the following:
- Senior executives who assess risks when making strategic decisions
- Legal teams who help businesses mitigate legal exposures
- Finance managers who support compliance with regulatory requirements
- HR executives who deal with confidential recruitment information
- IT departments that protect data from cyber threats
A GRC framework is a model for managing governance and compliance risk in a company. It involves identifying the key policies that can drive the company toward its goals. By adopting a GRC framework, you can take a proactive approach to mitigating risks, making well-informed decisions, and ensuring business continuity.
Companies implement GRC by adopting GRC frameworks that contain key policies that align with the organization’s strategic objectives. Key stakeholders base their work on a shared understanding from the GRC framework as they devise policies, structure workflows, and govern the company. Companies might use software and tools to coordinate and monitor the success of the GRC framework.
GRC maturity is the level of integration of governance, risk assessment, and compliance within an organization. You achieve a high level of GRC maturity when a well-planned GRC strategy results in cost efficiency, productivity, and effectiveness in risk mitigation. Meanwhile, a low level of GRC maturity is unproductive and keeps business units working in silos.
What drives GRC implementation?
Companies of all sizes face challenges that can endanger revenue, reputation, and customer and stakeholder interest. Some of these challenges include the following:
- Internet connectivity introducing cyber risks that might compromise data storage security
- Businesses needing to comply with new or updated regulatory requirements
- Companies needing data privacy and protection
- Companies facing more uncertainties in the modern business landscape
- Risk management costs increasing at an unprecedented rate
- Complex third-party business relationships increasing risk
These challenges create demand for a strategy to navigate businesses toward their goals. Conventional third-party risk management and regulatory compliance methods are not enough. Hence, GRC was introduced as a unified approach to help stakeholders make accurate decisions.
What is the GRC Capability Model?
The GRC Capability Model contains guidelines that help companies implement GRC and achieve principled performance. It ensures a common understanding of communication, policies, and training. You can take a cohesive and structured approach to incorporate GRC operations across your organization.
You learn about the context, values, and culture of your company so you can define strategies and actions that reliably achieve objectives.
Ensure that your strategy, actions, and objectives are in alignment. You do so by considering opportunities, threats, values, and requirements when making decisions.
GRC encourages you to take actions that bring results, avoid those that hinder goals, and monitor your operations to detect sudden changes.
You revisit your strategy and actions to ensure they align with the business goals. For example, regulatory changes could require a change of approach.
What are common GRC tools?
GRC tools are software applications that businesses can use to manage policies, assess risk, control user access, and streamline compliance. You might use some of the following GRC tools to integrate business processes, reduce costs, and improve efficiency.
GRC software helps automate GRC frameworks by using computer systems. Businesses use GRC software to perform these tasks:
- Oversee policies, manage risk, and ensure compliance
- Stay updated about various regulatory changes that affect the business
- Empower multiple business units to work together on a single platform
- Simplify and increase the accuracy of internal auditing
You can also combine GRC frameworks on one platform. For example, you can use AWS Cloud Operations to govern cloud and on-premises resources.
You can give various stakeholders the right to access company resources with user management software. This software supports granular authorization, so you can precisely control who has access to what information. User management ensures that everyone can securely access the resources they need to get their work done.
Security information and event management
You can use security information and event management (SIEM) software to detect potential cybersecurity threats. IT teams use SIEM software like AWS CloudTrail to close security gaps and comply with privacy regulations.
You can use auditing tools like AWS Audit Manager to evaluate the results of integrated GRC activities in your company. By running internal audits, you can compare actual performance with GRC goals. You can then decide if the GRC framework is effective and make necessary improvements.
What are the challenges of GRC implementation?
Businesses might face challenges when they integrate GRC components into organizational activities.
GRC reports provide insights that guide businesses to make accurate decisions, which helps in a fast-changing business environment. However, companies need to invest in a change management program to act quickly based on GRC insights.
Companies have long been operating by keeping departmental functions separated. Each department generates and stores its own data. GRC works by combining all the data within an organization. This results in duplicate data and introduces challenges in managing information.
Lack of a total GRC framework
A complete GRC framework integrates business activities with GRC components. It serves the changing business environment, particularly when you are dealing with new regulations. Without a seamless integration, your GRC implementation is likely to be fragmented and ineffective.
Ethical culture development
It takes great effort to get every employee to share an ethically compliant culture. Senior executives must set the tone of transformation and ensure that information is passed through all layers of the organization.
Clarity in communication
The success of GRC implementation depends on seamless communication. Information sharing must be transparent between GRC compliance teams, stakeholders, and employees. This makes activities like creating policies, planning, and decision-making easier.
How do organizations implement an effective GRC strategy?
You must bring different parts of your business into a unified framework to implement GRC. Building an effective GRC requires continuous evaluation and improvement. The following tips make GRC implementation easier.
Define clear goals
Start by determining what goals you want to accomplish with the GRC model. For example, you might want to address the risk of noncompliance to data privacy laws.
Assess existing procedures
Evaluate current processes and technologies in your company that you use to handle governance, risk, and compliance. You can then plan and choose the right GRC frameworks and tools.
Start from the top
Senior executives play a leading role in the GRC program. They must understand the benefits of implementing GRC for policies and how it helps them make decisions and build a risk-aware culture. Top leaders set clear GRC-driven policies and encourage acceptance within the organization.
Use GRC solutions
You can use GRC solutions to manage and monitor an enterprise GRC program. These GRC solutions give you a holistic view of the underlying processes, resources, and records.
Use the tools to monitor and meet regulatory compliance requirements. For example, Netflix uses AWS Config to make sure its AWS resources meet security requirements. Symetra uses AWS Control Tower to quickly provision new accounts that fully adhere to their corporate policy.
Test the GRC framework
Test the GRC framework on one business unit or process, and then evaluate whether the chosen framework aligns with your goals. By conducting small-scale testing, you can make helpful changes to the GRC system before you implement it in the entire organization.
Set clear roles and responsibilities
GRC is a collective team effort. Although senior executives are responsible for setting key policies, legal, finance, and IT personnel are equally accountable for GRC success. Defining the roles and responsibilities of each employee promotes accountability. It allows employees to report and address GRC issues promptly.
How can AWS help with GRC?
AWS Cloud Operations optimizes cloud resources with business agility and governance control. You can manage dynamic resources on a massive scale and reduce costs.
For example, with AWS Cloud Operations, you can perform the following tasks:
Govern, grow, and scale AWS workloads in one place
Ensure your risk management process stands up to an audit
Automate compliance management to remove human error
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