governance risk compliance

Understanding the GRC Research by identifying what it isn’t, Instead of knowing what it is

GRC is an umbrella term that covers the three most vital aspects of any organization and they are: governance, risk management and compliance.

Governance

Governance defines the entire managerial approaches with the help of which senior executives control the entire organizational system. For this, the senior executives make use of hierarchical management control structure along with manipulating all sorts of management information. Governance activities make it possible for the team of senior executives to access accurate and complete management information at the right time. This enables the team to take appropriate management decision, to assure the systematic and effective application of their directions and instruction and to provide control mechanisms and strategies that could be followed by the organization.

Risk Management

It is a defined set of processes that helps the management in identifying, analyzing and then manipulating the risks potential in order to save the business objectives of the organization from those risks. The response of the management to potential risks mainly depends on their perceived threat and gravity and it may involve controlling, accepting, avoiding or transferring the threat to a third party. There can be several different types of risks for the organization that may include: financial/commercial risks, technological risks, information security risks, etc. However, regulatory compliance risk is, no doubt, one of the most important threats for the organization as well as for GRC.

Compliance

It simply means to conform to the stated requirements and guidelines of organization. Compliance is achieved through proper implication of management processes, which are responsible for identifying all the applicable requirements, such as: contracts, laws and regulations, policies and strategies. Besides, the management processes are also responsible for assessing compliance as well as non-compliance risks.

Each of the above discussed disciplines of GRC consists of 4 basic components: processes, strategies, technologies and people. On the other hand, internal policies, risk appetite and external regulations of an organization are the factors that constitute the GRC rules.

But ultimately, GRC research is all about securing the integrity of the organization. In order to perform a complete GRC research on an organization the following questions must be answered properly:

• How the organization is governed and managed?
• Does the organization identify, assess and manage the risks, while staying within boundaries of risk tolerance and appetite?
• Does the organization meet all of its obligations towards its legal and regulatory compliance as well as towards its sustainability commitments and social responsibility?
• Are the policies, codes of ethics and procedures of the organization are comprehensible to its business partners and employees?
• Do the organization’s approaches towards its risks and compliance contribute to the corporate strategies, performance and objectives?

The real challenge of GRC research is that all its 3 disciplines – governance, risk management and compliance – have their different meanings and connotations across the organization. For example: there are IT governance, corporate governance, strategic risk, financial risk, IT risk, operational risk, Sarbanes-Oxley (SOX) compliance, corporate compliance, privacy compliance, employment/labor compliance, social responsibilities, ethics, list of mandates and the list goes on and on. Hence, it is better to define the GRC research by understanding what it is not, instead of trying to know what it is.