Corporate leaders may balk at yet another acronym sneaking into the business lexicon, but “GRC” – governance, risk, and compliance – is worth your attention regardless. The good news is that GRC is a set of business practices most businesses likely already have in place, especially if you work in a highly regulated industry.
This guide will help you understand the components of GRC and how to strengthen it within your organization. We’ll define key terms and give you the step-by-step process for building GRC practices that ensure success.
What Is GRC?
Governance, risk, and compliance is a set of business practices that fall into three main parts:
- Governance: Company-wide management assures that all departments align with the overarching goals and business objectives.
- Risk: This means that all risks taken within the organization are managed, protected, and aligned with business objectives.
- Compliance: Managing company-wide operations so that they adhere to any relevant federal, state, and industry-specific laws and regulations.
Applying GRC specifically to IT systems can include:
- Ensuring that the IT department aligns with company objectives.
- Auditing company data to understand current cyber risks and developing cybersecurity management.
- Understanding cybersecurity legislation and compliance requirements locally, nationally, and sometimes internationally, to avoid penalties and fees.
You should work with key stakeholders across your enterprise to develop a GRC framework that clearly defines metrics for successful implementation. This way, you’ll be able to better understand the effectiveness of your GRC framework.
A digital platform may be useful for comparing metrics throughout the fiscal year and for making adjustments to your framework as needed.
A closer look at governance reveals it to be a set of rules, policies, and business processes for a company or organization. Corporate governance helps stakeholders and leaders to make decisions and ensure that all departments work toward the same objective.
Governance, as it relates to IT, refers to the infrastructure of the IT department, whether that’s software, tools, or human talent. A company with a well-funded IT department would take the first step toward good digital governance as the budget line helps to determine the extent to which the department can mitigate cyber risk.
Risk is a fundamental part of running a business, whether that means strategic risks to gain opportunities or cyber risks that come with certain losses. Risk management is how your organization plans for or responds to those risks, including:
- Financial risk
- Operational risk
- Credit risk
- Reputational risk
- Information security risk
- Compliance risk
- Market risk
- Fraud risk
When applied to IT, risk management usually refers to the cybersecurity infrastructure for your company, whether that’s a regular cybersecurity audit or internal cybersecurity training for staff. It may be helpful to break your cyber risk management into a few sections: analysis, evaluation, and response.
Cyber risk analysis consists of company-wide data audits and understanding current cybersecurity practices. Think of it as getting all the digital pieces of your company in one place so you can get a clear picture of the whole.
A cyber risk evaluation then takes all of those pieces and checks their effectiveness. The effective portions can then be strengthened for any developing or new cyber threats; and the ineffective portions should be treated for improved cybersecurity protocols.
To keep all members of a supply chain safe, including your business, your customers, and your business partners, many countries have implemented local and international regulations.
Violating these regulations, or being found non-compliant, can result in penalties, fees, or loss of trade. As such, it’s crucial that your business maintains compliance practices that help to assure you avoid these potential financial and reputational losses.
Some IT-related regulations include the European Union’s General Data Protection Regulation (GDPR), and the U.S. Health Insurance Portability and Accountability Act (HIPAA). Both laws protect consumer privacy by regulating how organizations collect and process personally identifiable information.
Why GRC? Safeguarding Your Business From Interconnected Risks
A GRC strategy is important because it unifies your risk management and compliance practices across your company. This type of simplified strategy better protects you against interconnected risks, while improving your potential for growth by reducing the number of silos you work within and the risk of redundancies.
GRC also allows you to mitigate cyber risks across departments. An interconnected cyber risk management strategy will assure improved cybersecurity company-wide while also increasing the efficiency of your regular cyber audits. Having GRC software for this type of monitoring can help to streamline reports and changes within a single dashboard.
Governance, Risk, and Compliance Use Cases
To better understand the importance and application of a GRC program, here are a few example use cases:
Monitor for vulnerabilities and understand the impact
Perhaps the biggest function of cyber risk management within GRC is the monitoring vulnerabilities across your company. A regular risk assessment or internal audit across your company will help you to identify existing and developing risks, while allowing for adjustments of your company’s responsive strategies.
By knowing the risks within your organization, you’ll also better understand the impacts of those risks. For example, a data breach of customer information can cause huge financial and reputational losses. Monitoring the developing complexity of malware that creates these breaches will allow you to better prepare your cybersecurity efforts to protect against this cyber risk.
Ensure privacy standards are met
Working in a digital world means there is always the risk of privacy violations. Every industry has its own privacy standards and compliance requirements that your organization will need to meet.
In instances where you may trade internationally, you should also know the relevant country-specific regulatory compliance regulations. Some examples of these privacy standards are:
- General Data Protection Regulation (GDPR): Regulates the use of personal information online between customers and businesses. Violation results in the loss of trade within the EU.
- HIPAA: Protects personal information within healthcare systems.
- Family Educational Rights and Privacy Act (FERPA): Protects the privacy of student education records.
- California Consumer Privacy Act (CCPA): Enhancing privacy rights and protections for California residents.
Re-evaluate internal cyber security practices
As you monitor the developing risks to your organization, you’ll need to assure that staff is trained to protect against those risks. Updated cyber security training will help your organization to feel confident in individual risk management practices. This may include education around phishing practices and identifying malware, as well as identity and access management practices such as changing passwords periodically.
How to Assess Your GRC Maturity Level
GRC maturity is defined by how interconnected and developed your risk management practices are.
Are you still operating within defined silos with no defined leadership roles, no monitoring dashboards, and no risk mitigation strategies? Then your organization may have a low level of GRC maturity.
If you’re a company with regular cyber risk audits, comprehensive security training, and clear key stakeholders who own regular reports, you have a higher level of GRC maturity.
To assess your GRC maturity level, you’ll need to use a risk maturity model (RMM). The RMM provides an outline and list of best practices for improving, developing, and sometimes establishing your company’s enterprise risk management (ERM) program.
You can use a free self-assessment tool for understanding which aspects of RMM you’ve already implemented, and which you’re missing. Once the assessment is completed, you’ll receive a score from one to five ranking your GRC maturity level.
Choosing the Right GRC Tool
For efficient governance, risk management, and compliance practices, you’ll need GRC software that improves your interconnected risk management.
There are many GRC tools on the market, including some that specialize in specific industries. As with any major purchase for your business, selecting one begins with a list of needs and use cases when shopping around.
Consider first what tools you may already be using. If you’re bouncing between three or four programs all day, you may choose to focus on a GRC tool that allows for streamlined dashboards or some automation. If you’re responsible for creating quarterly cyber security audits and reports, you’ll want a GRC software with simple export functions and easy-to-understand reports.
Schedule a Demo With ZenGRC Today
Reciprocity offers a unique GRC experience via a single cross-platform dashboard. ZenGRC is an integrated software platform that best equips your organization to monitor changing risks, improve governance strategies, and ensure compliance across the whole enterprise.
And you’re never alone with ZenGRC and Reciprocity. You’ll have access to GRC risk experts who can help you build the right risk program for your business and guide you through the GRC maturity process, whether you’re already at a five, or you’re just starting at a one.