What Is GRC?Rajesh Unadkat
GRC is an acronym for Governance, Risk, and Compliance. These three fundamental elements help create a system of people, processes, and technology within an organization that work in concert to improve an organization’s internal processes. The purpose of this system is to conform to one or more defined goals, all while adhering to laws and regulations pertaining to the industry.
GRC: The Basics
While there is no universally accepted definition of GRC, its three elements are usually characterized roughly as follows:
Governance – This refers to the overall management processes of a given organization. Governance is essentially driven by the senior management (C-level) team, which sets goals for the organization as a whole.
Risk Management –This refers to an organization’s attempts to identify and analyze threats to its operations. Often, these threats involve failure to conform to government regulations.
Compliance – This refers to corrective actions made by the organization to mitigate risks that have been previously identified.
Focus of GRC
GRC can be applied to the infrastructure and operations of an organization as a whole, to a portion of the organization, or to only a specific department. When GRC is restricted in its scope, it often focuses on one or more specific aspects of the enterprise, such as:
Information Technology (IT) – This refers to the alignment or realignment of IT processes so that they support company objectives and/or conform to regulations, such as the storage of sensitive records.
Financial – This refers to the totality of measures undertaken to align financial processes with the company’s goals and/or regulatory requirements.
Legal – This refers to the actions and strategies instituted to ensure that the company becomes or remains compliant with any applicable legal requirements.
What Kinds of Risks Must Be Managed?
In the corporate world, risks refer to anything that might adversely impact the company’s bottom line. These can include:
Legal regulations – All businesses must conform to a certain number of regulations—some of them applicable to every organization, others only to specific industries. Here are only a handful of the regulations currently enforced:
- Occupational Safety and Health Administration (OSHA) rules – Businesses must take reasonable steps ensure that the workplaces where employees perform their various duties are free of hazards that may cause physical injury. Failure to comply with OSHA rules can lead to serious liability problems. For that reason, a company’s GRC framework often covers potential workplace hazards recognized by OSHA.
- The Sarbanes-Oxley Act of 2002 (SOX) – This legislation applies to all U.S. companies that are publicly traded. Its purpose is to aid investors in obtaining accurate financial data. To this end, SOX requires companies to maintain an appropriate level of financial transparency.
- Payment Card Industry Data Security Standard (PCI DSS) – The PCI DSS applies to all businesses that process payment cards. It places heavy restrictions on data processing and management—for example, companies are generally not allowed to retain “sensitive” customer information, such as credit card numbers, longer than strictly necessary.
Internal policies – Companies also rely on GRC to promote compliance with internal policies such as yearly employee reviews and continuing education/training requirements.
Suboptimal operations – If a company is paying out an excessive amount of overtime bonuses, or if its other expenses seem extravagant, then GRC may help it identify and correct these inefficiencies.
The Role of GRC Software
A first-rate GRC software package can help a company coordinate its various governance, risk management, and compliance processes, ensuring that no vital steps are overlooked and important procedures occur on time, in sequence, and according to schedule. This is especially useful for large enterprises with multiple locations that may each be subject to a different set of local regulations.
The Aruvio GRC system provides a wide range of useful tools. With Aruvio, companies have access to a highly effective system for organizing and streamlining their GRC processes.