Whether organizations realize it or not, they are all affected in some way by governance, risk management and compliance (GRC). What they may not also realize is that all three pillars of GRC work together in relation to company objectives:
- Governance includes the management approach used to direct the organization towards the successful completion of objectives. The approach can include rules, policies, internal procedures, etc.
- Risk management helps to identify, control and mitigate the risks that may prevent the organization from meeting its objectives.
- Compliance is about successfully addressing requirements emanating from laws, regulations, policies, internal procedures, contracts, etc. Compliance is about removing a significant obstacle to the successful completion of objectives.
The constant interaction between governance, risk management and compliance is the main reason why the industry is talking more about GRC, instead of looking at each of the 3 parts in isolation. This is especially the case for companies that have the maturity to realize that GRC is about making sure a company meets its objectives, not just reducing risks.
It is therefore not a surprise that many companies are turning to software solutions to manage GRC in an automated and centralized way across the entire organization. For them, this is an investment designed first and foremost to help them meet corporate objectives.
In addition, it is becoming increasingly clear that EHS, Sustainability and Risk are converging. Best-in-class companies are implementing a single holistic solution to become resilient, compliant, efficient, and engaged with stakeholders. Many organizations are leading the way by having an enterprise-wide GRC platform that is also leveraged to attain EHS excellence.
Does your organization need a GRC solution? What signs point to the need to make an investment in a GRC platform? While there are many reasons why a company may decide to move forward with a GRC solution, we provide below four signs to look for. These are reflected in a new Info-Tech Research Group report available to download from our website, research analysis from industry experts, insights from companies that implemented a GRC solution, and feedback we received at Enablon.
1) A highly regulated environment
All companies are subject to regulations. But industry and geography have direct impacts on the level of regulatory complexity. Some industries are more regulated than others, therefore have a greater need for a GRC solution. For example, following the global financial crisis of 2007–08 and the U.S. subprime mortgage crisis of 2007–09, the faced an onslaught of new regulations. In addition, the , as well as industries that use chemicals heavily, have been subjected to stringent regulations for years, especially in the European Union with the REACH regulation. Moreover, some countries regulate businesses more than others. Finally, companies that handle confidential data from customers also face an array of strict regulations from various countries on the storing and handling of such data.
2) Multiple sites and facilities
If a company has a large number of sites, facilities and plants spread around the world, or even within the same country, then there is a greater risk of something going wrong. When it comes to compliance, a company is only as good as its weakest link. With so many individual parts to worry about, a manual GRC approach becomes unsustainable. A GRC solution enables , as well as common taxonomies, standards and methods for risk identification, management and reporting throughout all sites.
3) More operational complexity
Complexity increases by the amount of regulations a company has to comply with, and the number of sites. It also increases due to the nature of an enterprise’s operations and processes. Some industries have complex operations and processes, especially if they are asset-intensive, such as , , and . The higher the operational complexity, the higher the obstacles that could surface with regards to meeting corporate objectives, which leads to a greater need for a GRC solution. When a process is complex, there are more potential operational bottlenecks, hence risks that corporate objectives are not met.
4) A lower risk appetite
Risk appetite is defined as “the level of risk that an organization is prepared to accept, before action is deemed necessary to reduce it”. Some people also refer to it as “risk tolerance”. Contrary to what some may think, not all risks need to be mitigated. An organization may decide consciously, after having properly analysed a risk, that it will simply live with the risk and accept the potential consequences. But each company has its own appetite for risk. Based on a number of factors (industry, geography, company culture, company size, corporate structure, supply chain, etc.), an enterprise may have a low risk appetite, and thus would benefit from implementing a GRC solution.
What about your organization? Do any of these signs apply to your enterprise? If more than one sign applies, then you should seriously consider evaluating and implementing a GRC software solution throughout your enterprise. To get started, download the Select and Implement a Governance, Risk, and Compliance (GRC) Solution report. It provides a blueprint, including project steps and instructions, on how to streamline the vendor selection process and implementation planning, in order to improve the impact of your GRC, and save time and money.