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In order to create a risk-aware environment and make informed decisions, businesses can adopt advanced Governance, Risk, and Compliance (GRC) programs. To that end, here are four essential priorities for 2023 to consider:
Governance, Risk, and Compliance (GRC) is an all-inclusive methodology that aims to align business and IT functions while simultaneously managing risks and complying with government regulations. By implementing a flexible and robust GRC program, business executives can make better decisions, ensuring the continuity of their operations under any circumstance.
Here is a brief breakdown of the fundamental elements of a GRC framework:
Governance encompasses the policies and rules that govern a business, including the responsibilities of senior management and other key stakeholders. Good governance involves effective resource management, conflict resolution plans, transparent information sharing, and company-wide accountability.
Risk management helps businesses identify and mitigate risks across various domains such as information security, finance, legal, and business strategy. Risk management collaborates with all departments of a business to establish a unified framework that includes disaster recovery and business continuity.
Compliance is the process of ensuring that the organization and everyone within it adhere to all legal regulations, standards, and ethical policies. For instance, every healthcare provider in Australia is legally required to comply with the Privacy Act of 1988, which sets certain standards for safeguarding patient health information (PHI).
Implementing a suitable GRC program can transform a business by enabling it to navigate periods of economic volatility, regulatory changes, and various short-term risks such as cyberattacks and data breaches.
Despite the benefits, significant obstacles persist. For instance, compliance leaders estimate that evolving regulatory requirements and customer demands may increase the costs of achieving and maintaining compliance by up to 30 percent in the next few years.
To confront these challenges, business leaders must reassess their priorities. Here are four critical considerations to keep in mind:
A business-first mindset is essential when it comes to GRC. Although regulatory compliance is necessary across the board, each organization operates under unique circumstances, which requires a tailored approach. This approach involves creating a GRC program that aligns with the business’s objectives, rather than approaching it as a mere checklist exercise.
Adopting a business-centric approach ensures that your GRC program supports the organization’s success and resilience in the face of risks. By engaging with stakeholders across the organization, GRC leaders can guarantee that their program is relevant, efficient, and well-supported throughout the business. Remember, the primary goal of GRC is to foster a culture of accountability and compliance, and that necessitates developing strong relationships.
It is impossible to completely eradicate risk, and every organization has limited resources to manage it. Therefore, risks must be managed according to business criticality while also considering legal obligations.
The process begins by categorizing and prioritizing risks in a way that is meaningful for your business. You must evaluate the probability and impact of all potential risks, including both internal ones like employee errors and external ones like cyberattacks.
Given the significant rise in supply chain and third-party vendor attacks, third-party risk management is crucial these days. Despite robust internal policies and controls, a third-party vulnerability can easily compromise the entire organization. Consequently, businesses must establish a single source of risk truth that provides visibility into all third-party and fourth-party risks.
Remember, a business’s strength is determined by its weakest link.
GRC is not a one-time project or something to be done at regular intervals. Instead, it is an ongoing process and a form of change management as your business adjusts to changing regulatory and economic realities. Achieving continuous compliance can be daunting because it requires regularly monitoring your company’s security posture to ensure compliance with new regulations and industry best practices.
Although most regulatory initiatives take years to come into effect, your business may not have as much time to adapt as anticipated, as seen with the rollout of regulations like GDPR and CCPA, which left many organizations struggling to keep up.
While there is typically sufficient advance notice before new regulations are implemented, it may still take months or even years to ensure that all systems and processes are prepared. Therefore, it is always better to be proactive by keeping an eye on global compliance regimes.
Governance is a fundamental component of both ESG (Environmental, Social, and Governance) and GRC strategies. ESG is an evolution of Corporate Social Responsibility (CSR) and serves as a form of self-regulation that contributes positively to the communities businesses serve. By aligning ESG with GRC, businesses can formalize their strategies and take a more structured approach to achieving their targets.
While GRC is primarily about mitigating risks and complying with laws and regulations, ESG is about exceeding these standards and aiming to make a positive impact on society and the environment. This can increase a company’s brand reputation and improve its resilience in the face of evolving expectations and regulations.
Integrating ESG and GRC requires effective monitoring and reporting across all areas of the business. By doing so, businesses can ensure that their efforts towards sustainable development and risk management are transparent and aligned with their overarching goals.
Managing the business technology landscape has become increasingly complex, with a variety of devices, accounts, and cloud-based assets in play. As a result, it is becoming more challenging to keep track of everything. This lack of visibility can make GRC a challenging task, but technology has the potential to address this issue.
To make strategic decisions, effectively manage risks, and adapt to changes, businesses need to eliminate silos. Integrated business management tools can accomplish this by consolidating your organization’s digital assets and information into a single platform.
After all, to manage and safeguard your business, you must first have a comprehensive understanding of its components.