It’s essential for boards to have a strategy for managing governance, risk, and compliance (GRC) issues. We examine everything you need to know about GRC management.
Companies today face a complex maze of internal and external risks, government regulations, and compliance mandates. From combatting cybersecurity threats to meeting SEC disclosure requirements and avoiding conflicts of interest in governance, the list seems to grow longer each year as companies and boards find themselves increasingly under the microscope.
Having a comprehensive strategy for managing governance, risk, and compliance (GRC) issues is increasingly essential. These strategies coordinate efforts that span numerous departments, such as IT, legal, human resources, finance, and security.
In this guide, we will explain what GRC is, why it’s important, common challenges associated with GRC, tips for implementing an effective GRC strategy, and how OnBoard can help.
What Is Governance, Risk, and Compliance?
GRC management is not a new concept — but its importance has been elevated in recent years as companies contend with increasingly intricate risks and regulations. Nonprofit think tank OCEG (formerly the Open Compliance and Ethics Group) is credited with coining the GRC acronym in the early 2000s to synthesize a broad range of related activities.
OCEG defines GRC as the “integrated collection of capabilities that enable an organization to reliably achieve objectives, address uncertainty, and act with integrity.”
A GRC strategy defines a company’s standardized processes and procedures that are designed to ensure it operates in a forthright and principled manner. The goal is to provide a clear roadmap for professionals managing different aspects of GRC across a company’s various sites, departments, or units to assure continual and consistent compliance organization-wide. It helps companies avoid duplicating efforts, and ensures GRC initiatives are aligned, efficient, and effective.
Why Is Governance, Risk, and Compliance Important for Companies?
Board directors, executives, and other company leaders are under near-constant pressure to navigate the many challenges associated with operating a business today. Some benefits of GRC strategies include:
- Break down silos. A comprehensive strategy ensures everyone is on the same page when it comes to implementing GRC in their respective areas. Regardless of which department they are in, everyone is pulling data and information from the same sources.
- Bring greater quality with consistency. Consistent company-wide processes and shared data sources provide greater accuracy. Company directors and other leaders can rest assured they have reliable and compatible information from which to make critical decisions.
- Provide clarity/transparency. Company leaders and stakeholders have greater trust and visibility into how GRC strategies are implemented. This allows for better oversight and more opportunities for collaboration.
- Build efficiencies. Standardized processes are easily repeatable. Individuals responsible for implementing GRC strategies know what is expected of them on a routine basis, and can be more productive and efficient as a result.
- Avoid duplication. By developing a unified GRC strategy, leaders can be logical in assigning specific responsibilities. Departments are better equipped to share resources and information, and avoid wasted time duplicating tasks.
- Cut costs. An effective GRC strategy saves money on multiple fronts — through increased operational efficiencies, better allocation of resources, eliminating duplicated efforts, and optimizing employees’ time. Savings also come from proactively countering potential threats and avoiding/mitigating costly risks and regulatory fines.
What Are the Challenges of GRC?
Implementing a comprehensive GRC strategy is no small undertaking. It requires broad cooperation and collaboration across an organization. Some common roadblocks include:
- Resistance to change. As with any transformative initiative, there will be individuals who are reluctant to change long-standing processes. The new approach may mean more or less responsibilities for specific individuals or departments—either of which can lead to feelings of resentment without appropriate communication.
- Limited scope of understanding. Leaders who don’t take the time to gather insights about existing processes, needs, and resources organization-wide run the risk of building an incomplete and ineffective GRC strategy.
- Lack of buy-in. Without broad employee input, understanding, and support, a wide-reaching plan inevitably will cause apprehension and face serious snags in implementation and execution.
- Inadequate allotment of resources. A comprehensive GRC strategy demands a significant investment in time, tools, and resources. Organizations that fail to properly invest in GRC end up with suboptimal results and the potential for added costs down the road.
- Assuming a one-and-done approach. GRC strategies quickly become outdated if they don’t evolve with changing industries, markets, environments, and regulatory requirements. Organizations should plan for an ongoing process of routine GRC strategy reviews and updates.
How to Successfully Implement GRC
An effective GRC strategy has broad effects and addresses critical priorities organization-wide. Due to their high level of importance, GRC strategies require leaders take a methodical approach to building, implementing, and maintaining them over time.
Some tips for a successful GRC strategy include:
Thoroughly evaluate current processes and needs
The first step is understanding how GRC-related processes are currently handled. This includes identifying who is responsible for what, which tools they use to execute specific tasks, the time and resources involved, standard data sources and protections, and where there are opportunities for improvement. It also involves assessing how risks are identified and addressed, what regulatory and compliance mandates your company is subject to, and how governance standards and expectations are defined.
Build a strong team
As you assess current processes, identify individuals from across the company who are most knowledgeable about GRC procedures and needs, and how they align with company goals. These individuals will help shape and mold your GRC strategy. Because GRC touches so many areas, it is important to establish a diverse, multidisciplinary team. This approach will help in developing a robust GRC strategy, avoiding duplication of efforts, and building much-needed, broad buy-in.
Research best practices and tools
A GRC strategy should be designed with best practices and optimal efficiencies in mind. The aim isn’t to add more work, but rather to streamline and improve current processes. Study lessons learned from other companies that have GRC strategies, gather input from a variety of stakeholders, and thoroughly research technology tools that will help individuals achieve better GRC management.
Prioritize security, accuracy, and efficiencies
GRC strategies innately involve managing sensitive data and information from across the organization. Streamlining data is essential to breaking down silos and ensuring everyone is pulling from a single source of truth, but it must be done with proper security protocols and protections. Companies need the ability to limit who has access to specific data and information along the pipeline in order to manage their respective GRC responsibilities.
Clearly define processes and accountability
As with any new initiative, affected individuals and departments need to have a clear picture of what is expected of them. Change is challenging enough — there is no room for ambiguity. Even the most well-designed strategy will fail if those responsible for enacting that strategy don’t fully understand the how and why of their roles. The GRC strategy should define specific GRC duties, objectives, and milestones for success, and include a thorough accountability map identifying who is culpable for oversight and/or execution of those duties.
Take an incremental approach
A GRC strategy should be implemented in stages. This allows stakeholders to get different aspects of the strategy up and running, work out any initial kinks, and establish those new processes before moving on to subsequent stages. An iterative approach optimizes the chances for success and minimizes the potential for a domino-effect of problems that can occur with an expansive, simultaneous implementation.
Communicate, communicate, communicate
Clear communication is vital to the long-term success of any GRC strategy. From the start, leaders should communicate the objectives and importance of the initiative to gain understanding and buy-in from stakeholders. They should communicate roles and responsibilities, investments, successes, and strategic milestones. To keep momentum going, they also should continuously communicate the value of the GRC strategy and GRC benefits, including savings realized, risks averted, and other outcomes achieved.
Commit to continuous improvement
Executives and board directors should approach GRC as an ongoing effort. Measures should be built in to allow for routine reviews of existing processes and future needs relative to evolving markets, governance expectations, industry regulations, and compliance mandates. Individuals involved in managing GRC should have opportunities to provide feedback and suggest improvements based on their own experiences and successes in other companies. Senior leaders should commit to listening and providing the resources the company needs to effectively evolve its GRC strategy moving forward.
How OnBoard Can Help You with Governance, Risk, and Compliance
Designing and implementing a comprehensive GRC strategy is a complex undertaking that requires collaboration and buy-in from across the organization. Providing directors and other stakeholders the right tools is vital to success. In addition to making everyone’s jobs easier, more accurate, and more efficient, the investment demonstrates the overall importance of GRC to the company.
OnBoard provides a number of user-friendly capabilities that can help organizations automate and synchronize their GRC efforts, including:
- A secure, centralized portal that provides a one-stop-shop for GRC data and resources
- Granular access controls that allow you to assign who can access what types of information within the portal
- Secure messaging that allows stakeholders to communicate and collaborate directly with individuals or groups
- Task management to help manage, organize, and track important GRC action items and responsible parties
- A limitless system of record that enables quick and easy access to a complete library of GRC documents in any type of file format
OnBoard is device-agnostic and easy to use, meaning it is accessible to users anywhere, anytime, and on any device. It provides the capabilities your company needs to effectively manage GRC strategies now and into the future.
About The Author
- Adam Wire is a Content Marketing Manager at OnBoard who joined the company in 2021. A Ball State University graduate, Adam worked in various content marketing roles at Angi, USA Football, and Adult & Child Health following a 12-year career in newspapers. His favorite part of the job is problem-solving and helping teammates achieve their goals. He lives in Indianapolis with his wife and two dogs. He’s an avid sports fan and foodie who also enjoys lawn and yard work and running.
- Board Management SoftwareNovember 16, 202310 Action Items to Reduce Remote Work Security Risks
- Board Management SoftwareNovember 13, 2023Vision Statement vs. Mission Statement: What’s the Difference? (Explained)
- Board Management SoftwareOctober 27, 2023How to Prepare an LLC Annual Report (Step-by-Step)
- Board Management SoftwareOctober 25, 2023What is a 501c3 Determination Letter? (Overview, Definition, and Examples)