Businesses are under a lot of pressure these days to comply with the complex and ever-evolving environment that is Governance, Risk Management, and Compliance. The need for a GRC framework is growing exponentially, and it is becoming increasingly more difficult and expensive to manage and comply with the many new regulations placed on businesses at a rate faster than businesses are able to integrate into their environment.
The GRC Framework
The key to a defensive strategy is the proactive and timely identification and execution of compliance and risk. GRC is not just one particular subject, discipline or venture. It is the attempt to develop a unified approach to interrelated tasks and events within an enterprise, aimed at effectively managing IT risks. Instead of keeping data in independent “silos,” administrators can use a single framework to monitor and enforce rules and procedures. Successful installations enable organizations to manage risk, reduce costs incurred by multiple installations, and minimize complexity. Making GRC a part of everyday work processes leads to overall better business practices, enhanced security and reduced risk. The three components — governance, risk and compliance — are connected, and yet at the same time they are separate entities that require their own strategic steps and procedures.
Governance: Control enterprise decisions with a defined set of rules and procedures
Governance is the process used by companies to mitigate business risks. A governance policy will integrate elements such as balanced scorecards, risk scorecards, key policies, and compliance oversight into a process to push corporate governance.
The Governance area of a good GRC solution will include:
- Policy management
- Regular performance of business reports and scorecards
- Operational dashboards
- Ethics and policy compliance capabilities
Governance best practices:
- Build a board of directors and appoint a Chief Risk Officer that reports directly to the CEO. Risk management tends to lack authority in larger businesses and directing risk management issues directly to the CEO puts them in plain view, and more likely to be addressed.
- Define clear responsibilities and roles for all members of the board of directors, the Chief Risk Officer, CEO, and the respective GRC managers to establish accountability.
Risk: Promote awareness of business risk
Risk management is a structured process for monitoring the actions taken regarding business risks. Identifying risk and risk management is no longer left to only the specialists. In an effort to effectively manage corporate strategies, high-level executives and board members have begun to demand transparency in different areas of risk, including financial, operational, IT, security, and reputation related risk, in order to identify, measure, and manage the risk and exposure.
For risk management, it is absolutely necessary to have the ability to assess, analyze, prioritize, and identify trends and the root cause of issues, in order to mitigate risk.
- Identify trends
- Identify the root cause of issues
Risk best practices:
- Eliminate risk aversion from corporate culture. Bring risk to the forefront of the company and ensure employees understand risk and develop a risk mindset so that daily job functions are completed with regard to potential risk.
- Ensure constant communication. Risk managers must regularly communicate risks and changes in risk with employees, educate, and train them.
Compliance: Remain consistently compliant to ever-changing regulations
Compliance is the assurance that a business has the necessary internal controls to meet government requirements and regulations. This is an ongoing process as compliance deadlines are not a one-time thing. A streamlined process to manage organizational compliance is necessary in order to control costs.
Key Compliance capabilities needed in a GRC solution include:
- Issue Tracking
The solution must also be able to support a large number of governance and risk management processes as with larger companies, many regulations are in play, including SOX, ethics, policies, HIPAA, ISO 9000, and many more.
Compliance best practices:
- Make compliance a priority in the business. Stay consistently up-to-date in regulatory compliance guidelines, so your company portrays a compliant image. Break down data silos and align compliance with the risk management line of business.
- Prepare for change. Compliance regulations are ever-changing, and applying the same rules and guidelines year after year will result in stagnation instead of growth. Integrating compliance and risk management, making regular improvements, and following current guidelines will make all the difference.
Simplify GRC with a comprehensive solution
A single GRC framework solution, such as SAP GRC, which automates workflow processes, balances risk exposure, and streamlines multiple compliance programs, can manage governance, risk management, and compliance initiatives in a company to help mitigate confusion with multiple systems, excess work, and help to streamline the processes in managing and implementing a GRC framework. Comprehensive GRC solutions provide businesses with the ability to mitigate risk and comply with government regulations without disrupting business performance.
*Checkpoint Whitepaper How to Implement an Integrated GRC Architecture
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