GRC or, Governance, risk and compliance, is a familiar term in business. It refers to the strategy that organisations use to align objectives to suit these three main areas. With a proper strategy for governance, risk and compliance, a company ensures that the right people have the information they need to help meet the established goals.
However, it is difficult to craft an actionable plan without understanding the fundamentals of governance, risk and compliance. This article seeks to do that. Get to learn what lies beneath the three words.
What does GRC stand for?
GRC stands for Governance, Risk and Compliance
What does GRC mean?
GRC is an abbreviation/acronym for Governance, Risk and Compliance. A business strategy whose main focus is establishing a method that ensures the correct people get the correct information at the right time; and that the correct actions are taken.
What is GRC? Governance, Risk and Compliance Explained
OCEG, originally the Open Compliance and Ethics Group a nonprofit think tank organisation, invented GRC to define the critical capabilities that have to work together towards principled performance.
For better comprehension, the framework can be broken down into its core elements.
Governance refers to the establishment of policies to guarantee that organisational activities go hand-in-hand with the objectives. It involves the seamless allocation of responsibilities and rights to a company’s different decision-makers. Some of the essentials of governance are corporate management, strategy and policy management.
Risk is the probability of damage and is present in every business at varying capacities. An enterprise might face risks to health & safety, reputation or customer data, among others. Risk management, therefore, consists of a set of processes to identify, evaluate and address potential threats to an organisation’s well-being.
Compliance is the practice of structuring activities in a way that adheres to the laws and regulations that govern a particular business. When done right, compliance minimises risks. Organisations that fail to comply can incur hefty penalties.
From these highlights, the framework can be defined as the proper overall governance of an enterprise, the adequate management of risks and complete adherence to compliance requirements.
Why Do You Need GRC in Business?
Businesses have to deal with too many systems today. For that reason, not every executive might be convinced about investing in a GRC strategy. Learning the benefits of the framework can help with that.
When executed properly, the processes reduce costs. An enterprise can identify areas with unnecessary spending and eliminate them.
You can boost employee productivity and morale by decreasing paperwork and bureaucracy. The framework allows you to get rid of procedures that don’t serve any purpose or aren’t working logically.
Risk management and compliance do a lot to maintain the reputation of an enterprise. Managing these elements means that a company is doing what it is obligated to do while protecting the staff, customers and other stakeholders.
Monitoring risk and compliance also help to enhance quality management. The system allows the repeatability of processes. So, businesses can standardise operations easily, which leads to improved consistency and efficiency.
Greater information quality is another advantage. Implementing governance, risk and compliance processes provides a consistent approach to these three principles. Therefore, a company can collect high-quality information fast, which facilitates confidence and rapid decision-making.
How do you use GRC?
Now you know what value governance, risk and compliance offer to your company. The next step is to implement the strategy correctly. For successful adaptation, involve everyone. Some aspects of the framework affect every part of an organisation. It would be too much to entrust the process to only a few individuals.
Collaboration and communication between all the structures of a company are necessary. Make certain you identify the roles that different professionals should undertake before installing the process.
For example, the CEO and board members should be able to provide oversight. Note that governance, risk and compliance don’t burden the business. Rather, the framework is designed to support and improve a company. Now you know what value governance, risk and compliance offer to your company.
The next step is to implement the strategy correctly. For successful adaptation, involve everyone. Some aspects of the framework affect every part of an organisation. It would be too much to entrust the process to only a few individuals.
Collaboration and communication between all the structures of a company are necessary. Make certain you identify the roles that different professionals should undertake before installing the process.
For example, the CEO and board members should be able to provide oversight. Note that governance, risk and compliance don’t burden the business. Rather, the framework is designed to support and improve a company.
GRC Benefits to Business
GRC should not be a burden to business, but a way to support and improve it. Keep business on track.
When GRC is used well, the benefits accrue. Integrating GRC processes can benefit the business in many ways:
- Reduce Business Costs
- Reduce Duplication of tasks
- Impact on operations reduced
- Improved data and information quality
- Ability to access information quickly and efficiently
- Ability to repeat business processes in a consistent way
What is GRC in terms of regulatory compliance?
The three components of GRC help ensure businesses successfully achieve their business goals.
Core to process is compliance which means ensuring that you are adhering with the laws, rules, policies and regulations impacting your business and industry set out by both or either industry or government bodies.
Failing to comply with regulations can cost a business financially with penalties and fines but also in terms of reduced performance levels, dangerous or costly mistakes, and even worse lawsuits.
Every country has different rules, laws that your business must comply with to enable you to trade within that country.
Regulatory compliance covers laws and legal requirements, regulations, and industry standards that apply to different industries and businesses.
Regulations Compliance Examples
UK & EU
GDPR General Data Protection Regulation: Rules for the protection of personal data, data protection principles, rights and obligations.
DPA or Data Protection Act : Data Protection Act 1998
Right to be forgotten or right to erasure: Under Article 17 of the UK GDPR Power and right to demand personal data about them be deleted.
Regulation (EC) No 45/2001
Freedom of Information Act 2000: Disclosure of information held by public authorities. The public “right of access” to information.
Health and Safety Compliance: Safety in the workplace
Food Standards: Food Standards Act 1999 protection of public health in relation to food.
FCA Financial Conduct Authority: Regulates financial services industry
FRC Financial Reporting Council: Regulate auditors, accountants and actuaries
USA
SOX, Sarbanes–Oxley or Sarbox: Sarbanes-Oxley Act of 2002: Also known as “Public Company Accounting Reform and Investor Protection Act” and “Corporate and Auditing Accountability, Responsibility, and Transparency Act”
U.S. law was created to protect investors from fraudulent accounting activities.
HIPAA Health Insurance Portability and Accountability Act: The Health Insurance Portability and Accountability Act of 1996
PCI-DSS: Payment Card Industry Data Security Standard: Created to protect consumer privacy and credit card information when transmitted online, processed, or stored by businesses.
Level 1 – Annually over 6 million transactions
Level 2 – Annually between 1 and 6 million transactions
Level 3 – Annually between 20,000 and 1 million transactions
Level 4 – Annually less than 20,000 transactions
GLBA Gramm–Leach–Bliley Act: Financial Services Modernization Act of 1999
FISMA: Federal Information Security Management Act of 2002. Information security
Dodd-Frank Wall Street Reform and Consumer Protection Act:
FCRA Fair Credit Reporting Act
Australia
ASIC Australian Securities and Investments Commission: Regulate company and financial services to protect consumers, investors and creditors.
APRA Australian Prudential Regulation Authority: Regulators of Australian Financial services industry
Canada
CFIA Canadian Food Inspection Agency: Safeguarding Food, Plants and animals in Canada
Netherlands
AFM: The Dutch Authority for the Financial Markets
Singapore
MAS Monetary Authority of Singapore: Regulates Banking, Insurance, capital markets and payments
ISO Industry Standards
ISO 19600: Compliance management systems
Checkify and GRC Strategy
A proper strategy provides many benefits for a business, but only if it’s successful. Before using any processes or tools, do your research to find out how the framework can benefit your company.
Checkify can offer a way to document all your business procedures and processes so they can be performed in the correct way every time. Documenting and guiding every task and process to make sure you are compliant and know who performed the task and track the process history.
Schedule processes to be performed, allocate to the best team member, manage workflow and analyse and improve your processes.
Giving you a great way to collaborate, communicate with a timeline of historic data for accountability.