Organizations employ a governance risk and compliance framework (GRC) to handle interdependencies between corporate governance policies, regulatory compliance, and enterprise risk management programs.
GRC strategies aim to help organizations better coordinate processes, technologies, and people and ensure ethical behavior. A well planned GRC strategy can address many of the challenges of the traditional, siloed approach to risk and compliance, including miscommunications, interdepartmental tension, and inefficiencies.
The GRC framework offers advantages for organizations of any size. However, it’s especially valuable for large enterprises that aim to implement cross-organizational governance, risk, and compliance programs effectively.
Here is an outline of the three core concepts of GRC:
Governance refers to a set of policies, rules, and processes that organizations implement to ensure their activities align with their business objectives and goals. It covers resource management, ethics, management, and accountability.
A successful governance strategy balances various stakeholder interests, maintains control of resources, and empowers employees to work correctly. It provides accountability for all behaviors and outcomes, manages worker conduct by encouraging a corporate citizenship approach, and enforces ethical business practices. Good governance involves clearly defining jobs and responsibilities and evaluating employees according to their results.
Risk management refers to identifying, evaluating, and managing various risks, including legal, financial, and security-related risks. Organizations must employ resources to minimize risks by monitoring and controlling the impact of security events.
A risk management system encompasses personnel, technologies, and processes for establishing and enforcing risk mitigation objectives. An effective risk management process requires keeping key stakeholders informed and incorporating legal, contractual, and business requirements.
A risk management program should include identifying security threats and managing risks such as unsafe practices and software vulnerabilities. The program can then assess the risks and implement plans to mitigate them and ensure business continuity.
Compliance refers to an organization’s adherence to government regulations, industry standards, and internal policies. Failure to comply with these obligations can impact business operations and result in legal and financial penalties.
Successful compliance management integrates external and internal compliance requirements. External compliance refers to industry standards and laws (such as Sarbanes-Oxley) that apply to an organization, while internal compliance refers to the organization’s corporate policies and internal controls. Organizations should regularly update and track compliance policies and provide adequate training for employees.
Here are the main difficulties organizations can encounter when employing a GRC strategy:
Related content: Read our guide to cloud governance
OCEG created an open-source GRC Capability Model integrating risk, governance, audit, ethics/culture, IT, and compliance. Organizations can apply this holistic approach to different compliance subject areas and situations and use it with specific functional frameworks, including COSO, NIST, ISO, and ISACA.
The model, based on a study of over 250 large organizations with documented best practices, was guided by over 100 specialists.
Here are the four components of the GRC Capability Model:
When talking about compliance efforts and risk management with board members, executives, and others, organizations can use the GRC Capability Model as a common language.
Organizations can follow these steps to implement their GRC strategy:
The key to successful GRC implementation is understanding and prioritizing the organization’s exposure and creating a roadmap for continual improvement. Most companies have likely done some of this work already, so the next step is to assess the overall enterprise and identify existing risk management and compliance activities. An organization can consult operating executives and management to gain a clear understanding of current GRC performance.
Management should compare existing policies and practices with the organization’s GRC objectives, considering the business areas most sensitive to compliance issues and security risks. This allows the organization to establish long-term goals and incorporate any industry or regulatory requirements that apply.
Finding the right GRC software can be time-consuming and expensive, but it’s key to managing risk and implementing strong GRC. First, the organization should identify which technologies can improve its existing business model and how. Then, it should identify the tasks it can automate and any security or compliance gaps it needs to address.
Ideally, there should be a single solution for all the company’s GRC requirements to avoid the complexity of managing different technologies with different data formats.
See how a robust, automated access governance solution can help your business improve visibility into risk and segregation of duties (SoD) violations across all your critical business applications.
After choosing a GRC solution, the organization must integrate it with its current policies and processes. GRC software providers typically offer consultations and demos to test the product. An account manager can provide guidance in using the software and implementing it in the organization.
Next, management should assign internal roles and responsibilities for employees in the organization to implement GRC, defining the steps each employee must take to implement and use the software.
No GRC product or implementation roadmap is flawless, especially at the start. Organizations must continuously monitor the progress of their GRC implementation to evaluate performance based on specified metrics. They should regularly assess risks, reevaluate existing controls, and update their policies to keep up with changing regulations and industry standards.
Governance risk and compliance solutions typically combine technologies to manage core GRC functions via a unified platform. Organizations can use a GRC platform to implement a systematic GRC management approach to monitor compliance and enforce policies.
An effective GRC solution lets administrators reduce management complexity, keep track of risks, and minimize costs by implementing a single, comprehensive installation. GRC software should provide risk examination and assessment tools to identify risks affecting business processes and internal controls. The software should identify the tools and processes controlling these risks and integrate them with the organization’s existing enterprise management software.
GRC tools can also provide an organized compliance risk management approach to help organizations ensure compliance with laws and regulations requirements, including SOX and GDPR. GRC platforms often provide features that help manage audits and documentation and operational, IT, and third-party risks.
Given the wide range of tools available in the GRC market, it may be difficult to choose the right solution. When selecting a GRC tool, organizations should consider the type of tool they require:
The GRC market has seen an increase in cloud-based tools, although there are also freeware and on-site products. GRC providers have been incorporating AI-based and automation capabilities (i.e., natural language processing, machine learning) to make their tools easier to use and help enterprises stay on top of the evolving risk landscape.
Related content: Read our guide to GRC Software
Let’s review the advantages and disadvantages of GRC solutions on-premises compared to cloud-based solutions.
The GRC approach is the foundation behind a company’s compliance and risk management team. So it’s essential that the technology doesn’t have any interruptions of service or security lapses and can be updated when required.
When a company hosts a GRC platform on-premises, it must use in-house IT infrastructure and servers to run the software. While this may have benefits related to data security, it has other drawbacks related to the software’s uptime and availability.
The organization is entirely responsible for server uptime, application configuration, and updates. These tasks require technicians who can manage updates and maintain the servers. There is also a limit to the load each server can handle, so it may be necessary to add more servers if the GRC program expands in scope.
Deployment of an on-premise GRC solution, including both servers and clients installed on user workstations, can be time-consuming.
The organization needs to purchase a software license instead of paying a monthly fee for usage. The license cost could be high up-front. Also, the customer is responsible for the ongoing cost of energy consumption and server upkeep.
In the long run, licensing fees will typically cost less than a monthly SaaS subscription. However, additional fees are related to hosting software on-premise, including maintenance, hosting, and troubleshooting.
Organizations often believe that on-premises software is more protected than cloud-based software. However, this isn’t always true. Staff is responsible for completing software updates on-premises, meaning security patches are not automatically installed. Also, cloud data centers have cutting-edge security that is usually not matched by an organization’s data center.
Certain organizations may need on-premises software because of compliance with legal and regulatory requirements. However, many organizations can now freely move to the cloud. Many cloud-based software vendors have worked to ensure their solutions are stable and secure enough for governments and large enterprises.
When moving to a cloud environment, organizations rely on the vendor’s servers to host their applications, which are accessible from any location or device.
Given that the vendor retains responsibility for hosting the application, it’s possible to achieve deployment within hours or days. Furthermore, there is no need for physical installation on a server or procurement of required hardware. The vendor also manages updates, which should happen automatically. Because each organization utilizes server space alongside other customers, they can scale up or down readily.
Instead of buying a license from the start, organizations generally pay for a SaaS solution in monthly payments. Vendors calculate pricing based on the number of users and the level of service required. There are no upfront capital costs, and pricing is generally fixed for a timeframe of 12-24 months. Customers can easily initiate upgrades and add extra services or users without manually updating the application.
Security for cloud-based GRC programs vary according to the provider. However, many software has higher security measures than on-premises tools. The vendor instantly installs security patches across all user applications. This way, there is no need to rely on in-house employees to perform updates. Organizations should select a platform that encrypts their information and has the required compliance certifications.
Managing GRC efforts can be a hassle, with seemingly endless amounts of manual work piling up by the day. Organizations typically have 200+ key internal controls to prove each type of compliance, and each control takes 40 or more hours to test. Furthermore, testing on these controls may only be done once a year. This is an error-prone process that only looks at 3-5% of the activity in a given enterprise.
Pathlock shifts organizations towards a continuous compliance approach, which proactively monitors controls and reports on violations of those controls in real-time. Organizations can have complete visibility of their risk and compliance status at all times so they are always prepared for the next audit.
Pathlock radiates governance, risk, and compliance information to the most critical tools in your landscape for real-time status on your key controls. Pathlock integrates with ServiceNow, MetricStream, Archer, SailPoint, Okta, SAP GRC, and more.
With a catalog of over 500+ rules, Pathlock can provide out-of-the-box coverage for industry and government regulations, including controls related to SOX, GDPR, CCPA, HIPAA, NIST, and other leading compliance frameworks.
Pathlock allows users to quickly investigate and respond to potential risky transactions by reviewing access, deprovisioning users, forcing 2FA, or even allowing Pathlock to respond intelligently in real-time, terminating suspicious sessions and blocking transactions in real-time.
Pathlock’s out-of-the-box integrations have your key business applications covered. Monitor and enforce controls across SAP, Oracle, Salesforce, Workday, NetSuite, Dynamics365, and more.
All entitlements and roles are correlated with a user’s transactional behavior, consolidating activities and showing cross-application SOD’s between financially relevant applications.
Pathlock identifies the largest risks by monitoring 100% of financial transactions from applications like SAP in real-time, surfacing violations for remediation and investigation.
Get in touch with us today for a demo.
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