The CXO’s guide to governance, risk, and compliance technology
TODAY’S organizations operate in multiple jurisdictions and are subject to various regulations and statutory requirements. Managing that and ensuring compliance in such an environment isn’t easy but it’s necessary.
While technology is part of the reason the legal burden on companies is increasing every day, it’s also what provides the solution.
Business leaders can explore the adoption of governance, risk, and compliance (GRC) software in order to make it possible to get an enterprise-wide overview of requirements and standards, and to map out where they’re falling short or how they’re beating benchmarks to deliver more to stakeholders.
What exactly is GRC technology?
GRC technology is essentially a piece of software that is either integrated into the company’s wider IT infrastructure or a standalone interface that taps into enterprise data to help provide a single-view of the organization’s global governance, risk, and compliance requirements.
The job of the software is to help automate many of the tasks involved in the process, in line with business objectives, and in a manner that is aligned with the organization’s vision and mission.
An important landmark research paper in the GRC technology space is A Frame of Reference for Research of Integrated Governance, Risk & Compliance by Nicolas Racz, Edgar Weippl, and Andreas Seufert.
“In itself, GRC is not new. As individual issues, governance, risk management, and compliance have always been fundamental concerns of business and its leaders,” explain the authors.
“What is new is an emerging perception of GRC as an integrated set of concepts that, when applied holistically within an organization, can add significant value and provide a competitive advantage.”
According to the paper, governance, risk management, and compliance are the core functions of any GRC software, where each function is comprised of four basic components: strategy, processes, technology, and people.
It further explains that the organization’s risk appetite, its internal policies, and external regulations constitute the rules that the GRC software is tasked with helping manage.
In an ideal implementation, subjects, components, and rules are merged in an integrated, holistic and organization-wide manner — aligned with the (business) operations — using the GRC software.
“In applying this approach, organizations long to achieve the objectives of GRC: ethically correct behavior, and improved efficiency and effectiveness of any of the elements involved.”
For the procure-to-pay cycle, for example, there is a strategy that sets and controls targets, there are the process steps from procurement to payment, and procurement staff as well as transactional and information systems enabling the cycle.
GRC supports the management and the execution of these operations. For example, through governance specifications for the handling of goods, segregation of duties across the procure-to-pay processes, and managing technologies to monitor risks in the supply chain.
Who does GRC technology support?
While GRC technology is something business leaders are most concerned with, it’s a smart piece of software that supports various divisions within an organization.
Primarily, on a daily basis, GRC software supports internal audit professionals, audit committees, compliance managers in various departments and committees, and finally, division and department heads across the business.
Modern-day GRC software is also in high demand by compliance teams compiling dozens or even hundreds of reports regularly in order to meet statutory requirements in the various geographies the organization operates in.
On the surface, it might seem like GRC software is most suitable to financial institutions because of the various regulations they’re subject to — but the reality is, the technology is just as important for a manufacturer or a hotelier as it is for a banker.
At a manufacturing facility, for example, GRC can help optimize auditing controls, improving capital expenditure decisions, and ensuring compliance with specific safety requirements prevailing in the various geographies the company operates in, among other things.
The bottom line is, the responsible thing for companies operating in today’s complex regulatory environment is to invest in GRC technology — not only to automate the mundane reporting tasks — but also to ensure that the company is able to gain visibility into the compliance environment of the future.