There are many paths to success in business and you’ll hear CEO’s of different organizations telling their secrets for the path to success. One thing every successful company has in common that not many CEO’s brag about is GRC. Unlike the radical innovations we’ve seen from the biggest names in Silicon Valley, GRC isn’t revolutionary. It’s a requirement.
GRC isn’t a difficult concept to understand. It’s familiarizing yourself with all the pieces of the puzzle that go into GRC that can get tricky. Once you understand what GRC is, you can begin to synchronize your team, the information your company uses, and the actions you take in order to create a seamless GRC strategy.
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GRC is an acronym that stands for “governance, risk management, and compliance,” but the true definition goes far beyond that. It involves the CCO and multiple shareholders that requires cross-departmental involvement and buy-in from everyone from entry-level employees to CEO’s.
GRC (governance, risk management, and compliance) is the term used to describe an organization's approach to addressing risks, staying compliant with the law, and managing company direction.
Understanding how the three components of GRC work together will give you a better picture of GRC as a whole. In order to give you a clearer picture of what GBRC is, we’ve broken down each section and summarized them below.
What is governance?
When most people hear the word governance they think of the federal government or the manner in which a country governs itself. While that’s not what we have in mind when we talk about corporate governance, the two are more similar than you might think!
Corporate governance is the framework of rules, regulations, and practices by which a company operates. Oftentimes, a corporate governing body is made up of a company’s senior leadership, board of directors, and company shareholders. They work together within a system of checks and balances to fulfill a variety of corporate governance functions.
The same way the federal government keeps everything on track for our country, corporate governance ensures that a company is staying the course by ensuring compliance with the law, accountability, fairness, and transparency in a company’s relationship with all major stakeholders.
What is risk management?
One of the functions of a corporate governing body is to identify, address, and prevent potential risks to the company. There are a number of things that can pose a risk to a business and being able to manage those risks is part of a comprehensive enterprise risk management strategy.
Enterprise risk management is a business strategy designed to identify, assess, and prepare for any dangers, hazards, and other potentials for disaster that may affect an organization's operations and objectives.
Risk management is a complicated job that requires multiple stakeholders and involvement from different departments – because of this, most companies will employ a third-party risk management consulting agency or an operational risk management software.
Regardless of how you choose to manage your risk management strategy, it’s important to have one in order to ensure the longevity of your business. Being prepared for any potential problems will help your company succeed in the long-run.
Discoverhow your company can benefit from a risk management software solution.
What is compliance?
In the business world, compliance is the act of adhering to the rules, policies, standards, or laws set fourth by the company you work for or a governing body.
Corporate compliance refers primarily to complying with rules and regulations set by an individual company. This can include the business ethics or employee code of conduct created by a corporation. Because businesses set these standards for themselves, they vary depending on where you work.
Regulatory compliance is a little different, in that it refers to the ways in which a company ensures they are following all the laws and regulations that apply to their business. These are set by larger governing bodies and are universal rules mandated for each industry.
While compliance is required for all industries, there are some where staying compliant is crucial in a day-to-day setting. Healthcare professionals are required to stay compliant with HIPPA and protecting patient information, financial institutions have a special set of laws they have to follow, etc.
There are many types of compliance risks that your business can face and not all of them come in the form of protecting information or user data. A compliance risk can be anything that puts the company at risk.
Much like risk management, compliance is a complicated process. Many companies employ the help of a Chief Compliance Officer whose sole job is to maintain compliance. Other companies use software like our very own G2 Track in order to track contracts, secure company data, and stay compliant.
Whatever your strategy includes, compliance is a massive undertaking that requires special care and attention. It pays to be organized and communicate with your team.
Related: Learn more about the five types of compliance audits and why you might need them!
Who should be involved in GRC planning?
Now that you understand what GRC, you might be wondering who at your company should be involved with it? As we’ve mentioned before, there are multiple stakeholders who should be part of the GRC process depending on their job description.
Here are a few of the people at your company who should be involved in GRC:
Senior leadership that need to identify and manage risk
Finance managers who assigned to meet regulatory compliance requirements
Legal teams dealing with records retention, vendor contacts, etc
IT managers who manage software installations and user data
HR managers who handle sensitive employee information
If your company employs a chief compliance officer or risk management professional, they should be central in leading other employees in implementing GRC. This can be done through training in best practices, software usage, and compliance.
Now that we’ve broken it down...
You can begin building up your GRC strategy. Think about what your company already does well and then create a plan to fill in the gaps. Remember that you can always hire third-party GRC consultants or use a compliance software program to make your job easier.
Looking for an easy way to stay compliant? Identify your company's compliance and security risks using G2 Track.
Lauren is a Content Marketing Team Lead at G2. You can find her work featured on CNBC, Yahoo Finance, and on the G2 Learning Hub. In her free time, Lauren enjoys watching true crime shows and spending time in the Chicago karaoke scene. (she/her/hers)