As a C-level executive in the financial services industry, you are constantly looking for ways to optimize your firm’s operations, achieve strategic goals, and reduce risk. Governance, risk management, and compliance (GRC) can help you do just that.
GRC is a framework designed to help organizations align their objectives with risk management and compliance policies.
In today’s highly regulated business environment, organizations need to have a comprehensive GRC system that enables them to manage their risks effectively, comply with regulations and laws, and meet the needs of their stakeholders. Let’s explore why organizations need effective GRC and how it can help them achieve their strategic goals.
What is GRC?
GRC comprises three key components to align policies, reduce risk, and ensure compliance.
Governance is the process of developing and adhering to policies, procedures, and practices that support an organization in meeting its business objectives. An effective governance system helps ensure that the organization makes decisions aligned with business goals. In addition, by establishing effective governance, organizations can ensure that their plans are being implemented effectively and have the necessary structures, processes, and systems in place.
Risk Management is the process of identifying, assessing, and mitigating risks associated with operations within the firm or from external threats the firm faces. An effective risk management program will help identify potential risks early so that they can be addressed before they become significant issues.
Compliance is the adherence to mandated internal and external standards, regulations, and best practices that must be met for a firm to operate responsibly and fulfill legal obligations. Good compliance requires an effective combination of policies, procedures, training, monitoring, and corrective action.
Why Does My Firm Need a GRC Program?
Financial services firms are under tremendous pressure from increased regulations, heightened scrutiny from investors, clients, and other stakeholders, and rising security risks. However, according to Hyperproof, 65% of businesses still manage IT risks using an “ad-hoc, reactive approach, with siloed processes and disconnected tools.”
A robust GRC response can benefit these firms by helping them address expanding regulations, control risk across all business units, reduce the cost associated with audits and due diligence questions (DDQs), improve compliance processes, and streamline reporting requirements.
By combining these three components into one unified system—GRC—firms can benefit from a variety of outcomes, including:
- Improved efficiency across departments
- Increased visibility into compliance requirements
- Reduced costs through streamlining processes
- Better identification of potential risks
- Streamlined reporting
- Better decision making
- Enhanced stakeholder confidence
- Strengthened brand reputation
- Improved organizational agility
- Amplified data security and privacy protection
By bringing governance policies and procedures, risk management, and compliance programs together, firms can swiftly adapt and adjust as needed while remaining compliant with all applicable regulations and internal best practices. Moreover, with integrated GRC—it will become easier for executives to confidently navigate today’s complex world of risk analysis and regulatory compliance more successfully.
Solving GRC
In the past, GRC organizations implemented GRC as distinct activities. Processes and systems were created in silos and often in response to a specific trigger—like new regulations, security incidents, or audit findings – without integration throughout the company. The approach created a web of inefficiencies, redundancies, and inaccuracies that left businesses vulnerable to fines and penalties, lawsuits, reputational damage, and even loss of revenue.
In today’s world of increased risks and shifting compliance, it is of the utmost importance to implement a GRC solution that creates an effective foundation for recognizing, assessing, and controlling risks. In addition, organizations must remain continuously vigilant and responsive to the ever-evolving risk and compliance environments with ongoing monitoring, support, and guidance.
GRC tools should also reinforce and streamline your policies, procedures, and processes. Given the complexity of the financial services industry, many firms are choosing an IT partner with domain expertise and one that provides strategic guidance and know-how in addition to a technology platform.