There are many different approaches and strategies which can be undertaken to mitigate organizational risks. There are four basic types of risk mitigation strategies, under which there are multiple methods and processes. These strategies are avoidance, transference, control, and acceptance. Since the GRC model includes managing risks, GRC helps all four categories in a different way.
1. How GRC helps in risk avoidance
Completely avoiding risks is the safest approach to take but it is not always possible. Every action has risks associated with it, so the only way to risk mitigation would be to take no action, which is obviously impossible for a business. The smart way is to analyze different opportunities and ensure that no decision is too risky. There needs to be a pre-determined level of risk that the organization will accept but anything above that needs to be avoided.
GRC solutions help predict and calculate risks, which makes it easier to avoid high-risk actions for an organization. An organization can easily see the impact an action will have on their overall organizational risk. Since GRC solutions map risks across different departments, documents, and more, businesses can quickly assess the far-reaching consequences of taking different actions and avoid the actions that increase risks too much.
2. How GRC helps in risk acceptance
There is no such thing as a zero-risk scenario. No matter what decision is undertaken there is always a small risk attached to it. Even the best plans that have been meticulously analyzed and reviewed can run into problems. Thus, it is important to be aware of these risks and accepting risks. Accepting a risk is important because the business can then focus on ensuring business continuity while factoring in the risk. Businesses can accept that something may go wrong and then plan for what to do if something does go wrong.
This makes the business stable and helps the business perform better. When management and employees know that there is a backup plan, they are more confident in their current plan, which increases productivity and efficiency.
3. How GRC helps in risk control
Controlling risks is perhaps where GRC shines the most. Risk mitigation strategies help in how businesses prefer to deal with risks. Instead of simply accepting risks or avoiding them, management finds a way to complete the task while limiting the effects of the risk to acceptable levels. Knowing current risks and knowing what components of the business will be affected by which risks is of paramount importance in controlling risk.
The risk mapping and risk predictions functions present in GRC solutions make it easy for organizations to assess the impact of risks in different scenarios. Management can see what method of risk control will produce the best results and put it in action.
4. How GRC helps in transferring risks
Sometimes the only way to manage risks is to transfer them onto another business. Many businesses completely avoid risks by out-sourcing a part of the business process to a vendor that is willing to take the risk. This risk mitigation strategy is great because it allows the business to function without exposing itself to the risk but there is one issue – the lack of control over outside parties. Businesses try to avoid transferring risks because it means losing control over their quality control and makes them dependent on vendors. Vendors can unexpectedly run into problems which can raise a lot of issues for their clients.
GRC vendor management systems alleviate the issues which make this strategy problematic. Vendor management systems collect all information regarding vendor performance and generate insights from the information. This allows management to gain actionable insights and feedback which can be shared with the vendor for better service delivery. Any vendor that has a history of failing to deliver will be immediately flagged by the system and raise risks.
Though the GRC looking glass
As GRC adoption increases we are slowly seeing a change in every risk, compliance, and governance strategy out there. These strategies are being reinterpreted in the GRC philosophy and overtime we will see how GRC ends up completely transforming the way we do business. If you want to see what benefits a GRC solution can provide to your organization, get in touch with the Predict360 team for a demo and trial of our GRC solution.
About the company
360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.