Companies with a similar business model are likely to face a lot of similar challenges. The long-term viability of a business model in a growing risk surface area is always a gritty task. As a result, companies that constantly look to eliminate risk proactively project confidence and beat present and evolving competition.
Governance risk and compliance (GRC) is essential for businesses that operate under regulated policies to avoid risks, and consequences on any side. Investing in GRC ensures sustainable growth & stable operations for your organization in the long run.
What is Governance Risk and Compliance (GRC)?
GRC is an umbrella term for an organization’s approach to cover governance, risk management and compliance adherence. Governance in simple terms is an organization’s direction and control strategy.
The governance function works as a central activity for all strategies. Be it decision-making and accountability in an organization’s governance are key to setting the tone for standard structure and processes. Risk is the possibility that an event will occur that will result in a loss. It is often described as the likelihood of an unwanted event. It can be an operational risk, strategic risk, financial risk and legal risk.
Compliance can be defined as a way of doing a certain task in business. Certain rules, regulations and policies are applied to every organization, following a compliance standard mean everyone in the company is aware of do’s and don’ts and following the same.
Examples of Governance Risk and Compliance
Let’s understand how a lack of understanding of a company’s risk environment could lead to issues with GRC.
A company that collects and processes personal data for others is subject to privacy regulations. Such regulations may require the company to implement processes, such as data protection governance, to ensure proper handling of data. A lack of clarity in data protection processes could lead to the violation of privacy regulations and result in fines or sanctions.
Potential Impacts due to absence of Governance, Risk and Compliance
- Financial- The cost of compliance adherence is often associated with financial risks. This may include the price of insurance premiums, legal fees, and other related costs.
- Operational- Operational risk is the risk that a company’s activities could have an impact on its ability to conduct operations. This could include the loss of a contract, the inability to deliver products or services, or damage to the company’s reputation.
- Legal- The risk of violating the rights of stakeholders can have a big impact on any organization. This is often associated with the risk of doing business with entities that require registration or that could cause reputational damage.
Managing Governance, Risk and Compliance
To manage the risk of doing business, organizations must understand their environment and the associated risks. Understanding the environment and the associated risks, they can assess the likelihood of an incident occurring and develop appropriate safeguards plans.
One way is to understand the various types of risk that exist and select appropriate safeguards and controls. Another way is to understand the various types of stakeholders that may have an impact on a company’s risk environment and select appropriate controls for each.
Depending on the types of activities a company is involved in, the company may want to adopt a risk-based approach to managing its risk. This can involve the adoption of a specific set of controls for each risk. In conclusion, setting up a GRC framework for an organization is challenging, and sometimes the time invested digresses the core business.
However, it is critical to understand the risk associated with your business and how to manage it. This can include understanding the various types of risks that exist and selecting appropriate safeguards and controls.
Outsourcing experts can be one of the easiest & smartest ways to implementation of the GRC framework and this will also ensure that the overall implementation process does not create any lag in your core business functions. To know more connect with our team of experts at Vinca Cyber.