What Is Governance, Risk Management, and Compliance (GRC)?
Let me explain to you what Governance, Risk Management, and Compliance (GRC) really is—it's a corporate management system that brings together these three functions across all departments in your organization to improve efficiency and cut down on risks and costs.
You see, GRC emerged partly as a fix for the 'silo mentality' that's often criticized in companies, where departments hold back on sharing information or resources with each other. This kind of isolation reduces efficiency, hurts morale, and blocks the growth of a strong company culture.
Understanding GRC
Governance, risk management, and compliance aren't new ideas in company management—they've been around for years—but the unified concept of GRC only started gaining traction around 2007.
The main goal of GRC is to lower risks and costs while avoiding duplicated work, and it demands cooperation from the entire company to meet the internal guidelines and processes for each of these three areas.
Key Takeaways
- GRC is designed to break the 'silo mentality' where departments hoard information and resources.
- It integrates governance, risk management, and compliance into every department for better efficiency.
- The purpose is to reduce risks, costs, and duplication of effort.
The Three Elements of GRC
- Governance, or corporate governance, is the system of rules, practices, and standards that direct your business.
- Risk, or enterprise risk management, involves spotting potential threats to the business and taking steps to minimize or eliminate their financial effects.
- Compliance, or corporate compliance, consists of the processes and procedures that ensure your company and employees operate legally and ethically.
Adopting a GRC System
If you're considering implementing GRC, know that there's a whole industry offering consulting services to help companies set it up.
Proponents of GRC point out that with more regulations, calls for transparency, and expanding third-party relationships, sticking to the old siloed ways is too risky. You can also find GRC software options, like the IBM OpenPages GRC Platform, MetricStream, and Rsam's Enterprise GRC, as noted by CIO.com—there are even cheaper or free versions, though they come with fewer features.
Advantages of GRC
Advocates say that rising government regulations, higher expectations for corporate transparency, and more third-party business ties have made the traditional siloed approach both risky and costly.
GRC instead emphasizes integrating key capabilities and functions across your organization, such as information technology, human resources, finance, and performance management, to name a few.
As an integrated method, GRC can vary between businesses, but it generally means each department must collect, share, and apply information and resources more effectively for the benefit of the whole company.
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