Governance, Risk, and Compliance (GRC) has become a top priority for businesses today, no matter their size. As companies work through complex regulations, manage risks, and uphold internal policies, GRC is taking centre stage. But why is it so important, and who really benefits from putting it in place?
GRC is not just about ticking boxes; it’s about building a resilient, trustworthy, and efficient organisation. In today’s fast-paced business environment, effective GRC practices can be the difference between thriving and merely surviving.
The importance of GRC has risen dramatically in recent years due to increasing regulatory complexity, heightened stakeholder expectations, the need for effective risk mitigation, and the potential for improved operational efficiency. GRC drives value across various business areas, including Environmental, Social, and Governance (ESG) initiatives, third-party risk management, information security, privacy management, and enterprise risk management.
Typically, GRC functions are owned by key executives such as the Chief Risk Officer, Chief Compliance Officer, or General Counsel, and in some cases, a dedicated GRC team reporting to the C-suite. Historically, GRC has been operated through manual processes, but this approach is increasingly inadequate for the scale and complexity of modern business operations. And each of these stakeholders stand to gain a lot by adopting technologies that streamline and automate GRC processes.
The Cost of Inadequate GRC
To truly grasp the critical nature of effective GRC practices implemented at scale, let’s examine some cautionary tales that demonstrate the consequences of falling short:
- The Wells Fargo Account Fraud Scandal in 2016 resulted in $3 billion in fines and severe reputational damage. A robust, scalable GRC framework could have provided the necessary oversight and controls across the entire organisation, potentially detecting and preventing the widespread unethical practices before they spiralled out of control.
- The Equifax Data Breach in 2017 cost the company over $1.7 billion in settlements and remediation. With a comprehensive GRC strategy scaled to match the company’s size and complexity, Equifax might have identified and addressed the security vulnerabilities that led to the breach, ensuring consistent application of security protocols across all systems.
- The Boeing 737 MAX Crisis, which began in 2018, led to tragic loss of life, grounded aircraft worldwide, and cost the company billions in damages. A well-implemented GRC framework at scale could have ensured that safety concerns were properly communicated and addressed across all levels of the organisation, potentially averting the crisis.
These cases underscore how a well-managed, scalable GRC process could have potentially prevented or significantly mitigated such issues.
Starting Point
Implementing an effective GRC strategy begins with developing a unified GRC framework that identifies common goals across departments, clearly defines roles and responsibilities, establishes policies that align with organisational objectives, and creates clear communication channels for GRC-related information. All of these can be made easy if you have in your arsenal tools and technologies that automate processes, centralise data management, and provide real time insights for informed decision making.
Technology plays a vital role in modern GRC solutions. For instance, in a third-party assessment workflow, technology can remove manual steps, add automation, and provide real-time data to different stakeholders. Key benefits of GRC technology include centralised data management, automated risk assessments and alerts, real-time reporting and dashboards, and enhanced collaboration across departments.
Common GRC Challenges and Solutions
Implementing GRC at scale presents organisations with several complex challenges that can hinder progress and leave them vulnerable. From misaligned departments to constantly shifting regulations, these obstacles can stall efficiency and increase risk exposure. Below are some of the most pressing challenges and how they can be effectively addressed:
Siloed Operations: One major challenge organisations face is siloed operations, where departments operate independently, resulting in poor communication and inefficient governance. When teams do not collaborate effectively, governance, risk, and compliance efforts often fall short, leading to overlapping responsibilities and gaps in accountability.
To overcome this, organisations should develop a unified GRC framework that clearly outlines roles, responsibilities, and policies across all departments. By fostering cross-functional alignment, businesses can ensure that all teams work towards the same compliance and risk management objectives. To further address this challenge, I would recommend establishing regular cross-departmental workshops and well-defined communication channels. These initiatives can help break down silos, promote transparency, and enhance collaboration.
Regulatory Complexity: Many organisations struggle to keep up with the constantly changing laws and standards that differ across regions and industries. This makes staying compliant challenging and can result in costly penalties or damage to the company’s reputation.
To make this easier, implementing a regulatory tracking system can help businesses stay updated on new legal requirements. Partnering with legal experts or GRC providers can also help organisations manage these changes, reducing the risk of non-compliance and making it simpler to adapt to new regulations.
Insufficient Training: I’ve seen firsthand how many employees struggle with GRC processes due to inconsistent or inadequate training. Without proper guidance, staff can easily misunderstand their responsibilities, resulting in errors or lapses in compliance.
To address this, organisations should develop comprehensive GRC training programmes tailored to specific roles. Incorporating e-learning platforms and offering regular refresher courses can help ensure that employees stay informed and confident about GRC requirements, leading to a more compliant and risk-aware workforce.
Reliance on Manual Processes: Many organisations still rely on manual processes for GRC activities, which can be inefficient and prone to errors. Using spreadsheets and outdated tools often slows down risk assessments, compliance tracking, and reporting, making it difficult to respond to risks swiftly.
Switching to automated GRC solutions can make a huge difference. Specialised GRC software automates risk assessments, compliance monitoring, and reporting, providing real-time insights into operations. This streamlining not only enhances accuracy but also helps businesses manage risks and maintain compliance more effectively and swiftly.
Maintaining GRC Efforts
Effective GRC implementation isn’t something you can set and forget. It’s an ongoing process that needs regular attention. To stay on top of things, real-time reporting tools are crucial, along with periodic reviews that involve management at every level. Tracking your performance with clear KPIs helps you know where you stand and where improvements are needed.
But it doesn’t stop there – continuous improvement is key. Companies should create a culture where feedback is encouraged to keep refining GRC practices. Regular training sessions help keep everyone in the loop, and compliance management software makes tracking changes far easier. By benchmarking against industry standards, you can spot areas for growth and make sure your GRC efforts keep evolving as the business and regulations change.
Looking Ahead
Navigating the complexities of governance, risk, and compliance can be challenging, but it’s a challenge you can overcome. By building a unified GRC framework, embracing technology, and committing to continuous improvement, organisations can face these challenges head-on.
Effective GRC is more than just avoiding penalties – it’s about creating a resilient, trustworthy, and efficient organisation. With the right approach, GRC can shift from being a burden to becoming a real competitive advantage.
As you evaluate your GRC strategy, ask yourself:
- Are your current GRC processes scalable and efficient?
- How quickly can you adapt to new regulations or risks?
- Are you fully leveraging technology in your GRC practices?
If you’re unsure about any of these, now might be the time to explore how technology can reshape your GRC approach. Partnering with GRC service providers can give you the tools, expertise, and processes to achieve your GRC goals and keep your organisation ahead of the curve.
At Nephos, we combine technical expertise and the strategic business value of traditional professional service providers to deliver innovative data solutions. We can help by providing a tailored GRC framework that modernises your processes, ensures scalability, and enables you to quickly adapt to regulatory changes. Click here to know how.
