What is GRC?
GRC is an acronym that stands for governance, risk management, and compliance. GRC consists of an organization’s integrated approach to managing these three interdependencies within industry standards.
Governance includes the rules, policies, and procedures within an organization that helps things run smoothly. Risk management is identifying and assessing various risks to a business. Compliance involves abiding by rules, policies, standards, and laws set forth by external parties such as government agencies.
Many companies use GRC platforms to manage these three elements under one umbrella. These platforms help businesses assess and mitigate risks, ensure compliance, implement audit programs, and support risk management strategies.
Basic elements of GRC
GRC is an integrated framework made up of three elements. Below is a description of each component in more detail:
- Governance: Rules, policies, procedures, and processes to inform corporate behavior all fall under the governance category. At a high level, governance is a system by which companies are controlled and directed. If an organization has a board of directors, this group will often influence corporate governance-related decisions.
- Risk management: Managing risks can mean different things. From a business perspective, risk management refers to effectively mitigating risks that will negatively impact or hinder an organization. Some potential risk areas include financial, information security, technology, compliance, operational, and more.
- Compliance: At a high level, compliance is ensuring a company and its employees are abiding by rules, laws, procedures, and other essential practices. Businesses should strive to comply with laws and regulations that impact them. Industry standards, ethical practices, and laws should all be considered part of an organization’s compliance efforts.
Benefits of GRC
GRC is necessary for effectively supporting the operations of a business. Companies who adopt these practices experience several benefits, including:
- Fewer instances of noncompliance. GRC activities help ensure compliance, which leads to fewer instances of noncompliance, which can be costly to businesses, resulting in fines, punishments, mistakes, penalties, and lawsuits.
- Increased visibility into threats and risks. When a GRC framework is implemented, company leaders have better visibility and insight into threats and risks to the business. This enables leaders to better prepare for and mitigate risks before negatively impacting the organization.
- Improves company alignment. This framework aligns employees to a governing set of rules and procedures to follow. This ensures that employees and external vendors comply with and align with business rules.
- Helps support changing compliance regulations. Keeping up with changing regulations can be challenging to navigate. A solid framework helps ensure companies remain compliant despite the ever-changing nature of regulations and standards.
- Eliminates silos. Without a holistic approach, governance, risk management, and compliance strategies operate in silos, leaving gaps for errors.
GRC best practices
GRC is a crucial system for all businesses. Companies who follow these best practices experience the most benefits:
- Establish roles and accountability. While GRC affects every employee within a business, certain employees will carry more responsibility for various processes. Board members, IT leaders, legal leaders, HR managers, and departmental leadership teams will all be involved. Determine who will be accountable for the three elements of GRC and their responsibilities.
- Align policies with laws and standards. Work with GRC stakeholders to ensure that all corporate policies align with laws and standards. Policies set the tone for day-to-day operations, which means they should support behaviors that are in compliance.
- Document policies and procedures. All policies and procedures should be documented and stored somewhere accessible to all employees. Having these items documented leaves little room for question and strengthens the GRC framework overall.
- Conduct audits regularly. GRC audits examine an organization’s procedures and practices. Internal audits should be conducted regularly to identify areas of improvement, improve policies, and address updates as needed. A third party should also conduct annual external audits. External audit results should be shared with the appropriate stakeholders for review.
Alyssa Towns
Alyssa Towns works in communications and change management and is a freelance writer for G2. She mainly writes SaaS, productivity, and career-adjacent content. In her spare time, Alyssa is either enjoying a new restaurant with her husband, playing with her Bengal cats Yeti and Yowie, adventuring outdoors, or reading a book from her TBR list.
