Governance, Risk, and Compliance
Governance, risk, and compliance influences the formulation of the business strategy and all types of business decisions. The concept of GRC was originally created by consultants several years ago for systems, software and services solutions.
Over time, it was extended to consulting services and scientific research on business issues. The goal of the alignment of the three elements of governance, risk, and compliance (GRC) is to improve corporate performance by improving decision making.
What is governance, risk, and compliance (GRC)?
GRC refers to an approach where technology is used to align governance, risk, and compliance and to unify the overlapping work for increased efficiency and productivity.
The term Governance is related to the context of senior management by the delegation of authority and control and supervision among the executive committee, directors and shareholders on the treatment of business risks.
The term Risk is related to the ability to identify and deal with business risks.
The term Compliance is related to the adherence of business actions to the rules that allow compliance with external laws and regulations, voluntary commitments, internal policies and, in general, the observance of business ethics.
Each of its components overlaps with the rest through business strategy and processes specified by all levels of an organization from the manager to the frontline. The levers of G, R and C favour collaboration.
The Compliance Officer should understand the three levers of the GRC, aligning the processes of corporate governance, risk management and compliance through policies and controls to improve collaboration between departments. This new governance, risk, and compliance integrating concept allows us, for example, to proactively exploit big data information to combine it with the knowledge of our policies to investigate risk alarms. A fragmented Compliance function makes it impossible to operate in global businesses.
In this global environment, it seems a tempting option to orient the Compliance function to generate more restrictive policies in some highly regulated countries, and more permissive policies in other countries with less impositions. However, this approach leads to communication problems and makes it impossible for us to deploy global compliance programs.
Once the auditor has collected enough information to create meaningful insights and develop corrective actions, they go on to the next step of the internal audit process, which is creating the audit report. This audit report lists every significant finding the auditor found while doing the field work. The significant findings, be they errors or vulnerabilities, are then studied in-depth. The report ends with corrective actions – the auditors presents solutions to the deficiencies in the current processes. This report is presented to management, which then reviews it.
Governance, risk, and compliance approach: automation + centralization + coordination.
The three cultures of governance, risk, and compliance model
The GRC culture, moulded through the actions of the Compliance Officer and thousands of business decisions, helps prevent errors and fraud before they are costly. The centralization through GRC allows the consistency of criteria and policies to build a uniform culture. No control, however effective, compensates for a bad culture.
Risk culture. We define it as the system of values and behaviours that affect the way in which risks are evaluated when making decisions. In practical terms, employees need to understand the company’s risk exposure to determine what they should do or what they should avoid doing.
Have a look at how the risk mapping, predictions, live holistic view, dashboards, and much more will help your business manage risk better than ever before.
Compliance culture. We define it as the general environment that affects how the company responds to its internal, external requirements and ethical principles. A strong compliance culture requires its employees to carry out the necessary controls on their procedures, even if they do not need to be monitored.
Culture of good corporate governance. We define it as the organizational measures and its actions that sustain the creation of company value for its stakeholders. A solid culture of good corporate governance allows us to provide a competitive advantage, safeguarding intangible assets for reputation. This aspect of culture involves the belief system that allows business to be conducted in an ethical manner by management and employees.
The boundaries of these three aspects of GRC culture are difficult to establish, just as any culture is difficult to delineate. The construction of a consistent culture is a long process that requires effective communication about ethics and accepted business practices, as well as the discipline and incentives system.
Governance, Risk, and Compliance Framework
The function of corporate governance, also called governance, describes the hierarchical organization between the board of directors, its executives and the control structures. This function requires a communication system that elevates the information to those who make decisions so that they can do so on complete and timely reports, as well as downloading the information of the strategies and directions to the executing areas. The function of governance arises from establishing the mission and vision that a business model requires, the definition of shared values and the supervision of the delegation of authority through the company.
Looking for ways to improve your organization through a GRC implementation? Learn more about how the Predict360 GRC solution can help your business. The cloud-based solution is easy to implement and provides fantastic ROI by improving productivity while lowering overall costs. Get in touch with our team for a demo.