What is GRC: Governance, Risk & Compliance Framework & Audit?

If you observe closely, the major challenge for a business is to ensure three things:

• There is a proper framework for governance and everybody knows their responsibilities.
• Risks to the business are managed properly, and 
• All this is achieved while maintaining proper legal compliance.

GRC is the answer to this problem. In this blog, we discuss everything you need to know about GRC and how implementing the GRC framework can help your business operate seamlessly.  

What is GRC?

GRC consists of 3 components: Governance, Risk, and Compliance. It is a strategic framework designed to help an organisation establish a proper hierarchy, effectively manage IT and security risks, reduce costs and uncertainty, and simultaneously meet regulatory standards.

A GRC strategy tries to achieve the following objectives:

• Integrate governance practices to ensure accountability.
• To develop management strategies to mitigate risks.
• Establish protocols that ensure compliance at all levels.

If a company achieves this, it can make quicker, more efficient decisions and enhance performance. Let's learn about each component of GRC in detail.

What is Governance in GRC?

The G in GRC stands for Governance. Its focus is on establishing policies and frameworks that are aligned with the company goals. Let's take a look at the purpose of the governance framework:

• To align the management decisions with the organisational objectives.
• Define the roles and responsibilities of the employees to ensure clarity.
• To ensure optimal utilisation of resources.

The key features of governance in GRC are:

• Transparency: Operations and decisions should be clear to all.
• Accountability: Roles should be defined at each level so everyone can efficiently fulfil their responsibilities.
• Ethics: All management decisions and operations should follow integrity and fair practices.

What is Risk Management in GRC?

The R in GRC stands for Risk Management. Usually, the GRC framework uses 3 steps to manage risks:

• Identifying potential risks.
• Analysing the impact of potential risks.
• Mitigating the potential risks in advance to avoid disruptions.

Here are the types of risks that the GRC framework addresses:

• Operational Risks: It is a type of risk that shows system failures. For example: issues in the supply chain.
• Financial Risks: Market fluctuations and default risks are the major concerns for a business.
• Strategic Risks: The risk of losses due to wrong strategic decisions taken by the management is called strategic risk.
• Security Risks: The threats of data breaches are real. The vulnerability of unauthorised access and cybersecurity risks are important for a business.
• Compliance Risks: A company that does not adhere properly to legal standards can attract penalties and losses. Hence, proper compliance is a must for a business's survival.

What is Compliance in GRC?

The C in GRC stands for Compliance. A business must follow various government and industry rules and regulations on a daily basis. Non-compliance with these rules can result in hefty fines, legal issues, and damage to goodwill. 

The GRC framework ensures that the company policies are framed so non-compliance can be avoided. Here are the essentials every company should put in place to ensure proper compliance:

• Understand the rules and regulations properly.
• Regular internal audits should be conducted to check for non-compliance and take corrective measures.
• Train the employees on the policies they can adopt to ensure proper compliance.

GRC Framework

The above image demonstrates how the GRC framework amalgamates governance, risk, and compliance. Here are the elements of the GRC framework:

• Managing organisational policies: GRC involves establishing organisation-wide policies and training the employees to follow them properly.
• Assessment of Risk: Identify the risks to the business beforehand and take corrective actions to avoid disruptions.
• Monitoring the Compliance: Placing automated check mechanisms to avoid non-compliance. Conducting periodical internal audits to check for irregularities and correcting them.
• Reporting: Create dashboards to present management with a comprehensive view of the GRC status in the organisation.

GRC Audit

Now, what is the purpose of a GRC audit? It evaluates whether or not the organisation is successful in implementing the GRC framework. If not, it identifies the gaps and provides corrective measures to implement GRC effectively. Usually, a GRC audit consists of the following 3 steps:

• Defining the scope of the audit.
• Evaluation of the processes and internal controls.
• Report to management with valuable insights and recommendations.

GRC Use Cases

Let's take real-life examples from various industries and how they implement the GRC framework. These are just examples and are not an exhaustive list of practices.

How to Implement a GRC Strategy?

Is there an ideal way to introduce the GRC framework in your business? Here are the steps of the GRC strategy that you can implement in your organisation:

• Assess the current state: Evaluate the existing policies and identify the gaps in the GRC.
• Set clear goals: Establish goals your organisation wants to achieve by implementing GRC.
• Build the framework: Develop the GRC framework you want to implement in your company, filling in the existing gaps.
• Technology Integration: You can use technological tools and software to perform checks at every stage and ensure proper GRC implementation.
• Train your employees: If you want your organisation to function smoothly, you should train your employees. As they become adept at following policies and compliance measures, the processes will become streamlined.

Enterprise Governance, Risk and Compliance

When you want to implement the GRC framework across your organisation on a large scale, it is called enterprise GRC. Successfully implementing GRC for large organisations that operate in multiple locations, even multiple countries, is a huge challenge. 

In such a scenario, it is important to integrate GRC at every stage to maintain consistency. The key features of enterprise GRC are:

• Centralised policy documents
• Cross-department visibility and data sharing
• Automated compliance tracking

Benefits of GRC

The significant advantages of implementing the GRC strategy are:

• A holistic view of the company is accessible to the management.
• Quicker and improved decision-making with proper information.
• Proper compliance with rules and regulations.
• Identification and management of potential risks.
• Streamlined processes and optimal utilisation of resources leading to reduced costs.
• Increased operational efficiency.
• Transparency helps in building trust and reputation.

By successfully implementing GRC, you can transform your business operations. You cannot only ensure compliance with the rules and regulations but also achieve all your goals. A strategic governance, risk, and compliance approach can provide sustainable growth.