Managing Governance, Risk, and Compliance for a Resilient Organization

GRC is an acronym that stands for Governance, Risk, and Compliance. This term was coined by OCEG (Open Compliance and Ethics Group) and refers to an organization’s strategy for managing governance, risk, and compliance requirements. GRC plays a vital role in managing an organization’s processes, contributing significantly to its resiliency and operational efficiency.

What is GRC?

GRC refers to a set of policies, rules and procedures that assist organizations in achieving their business objectives, managing organizational risk, and ensuring regulatory compliance. This framework ensures that IT infrastructure is used in a way that is consistent with overall strategic goals while also addressing the needs of stakeholders.

By providing a more transparent flow of information between different tiers of the organization, GRC enables enterprises to make better business decisions that are supported by accurate facts and figures. It also enables better resource allocation and investment in IT infrastructure, which leads to improved business operations and security posture. The goal of GRC is to assist organizations in taking control of the factors that drive the business and aligning them to effectively meet the organization’s overall goals and strategic objectives.

Benefits of GRC framework implementation:

Some of the key benefits that are achieved by the implementation of the GRC framework in your organization are as follows:

  • Effective leadership in all tiers of the organization
  • Improved decision-making
  • Reduction in overall costs incurred due to non-compliance
  • Reduced fragmentation and division among different departments of the organization
  • Elimination of silos by improving the flow of information among different departments
  • Increased visibility into vulnerabilities, threats, and risks to the business
  • Effective resource allocation and investments to improve operational and security posture
  • Reduction of business, legal, operational, security, and financial risks to the organization
  • Reduction in data breaches due to improved data security and privacy

Three Core Components of GRC:

The three core components of the GRC framework are described below:

Governance:

Governance refers to the set of policies, procedures, and rules established by senior leadership to govern the activities occurring at each level of the organization. The goal of governance is to make sure that all of the organization’s activities are aligned with the company’s overarching goals. Important decisions on resource allocation, ethics, management, and accountability are all addressed by governance.

Governance also seeks to strike a balance between the needs of various business stakeholders such as the board of directors, shareholders, employees, investors, and suppliers. It also ensures that resources are correctly allocated and organized, as well as provides employees with a work environment that empowers them and encourages them to act responsibly.

By fostering corporate citizenship and ethical business practices, a successful governance strategy ensures accountability of behavior and outcomes. It also establishes clear responsibilities for employees at each level of the organization and evaluates them based on their performance.

Risk:

The risk component of the GRC framework can be more precisely characterized as risk management. The process of identifying, assessing, and controlling risks to an organization is known as risk management. The outcomes of risk management activities serve as input for decision making and planning for negative events or positive opportunities. The purpose of risk management is to detect various types of organizational risks such as financial, legal, regulatory, reputational, and security risks, as well as to implement cost-effective countermeasures to mitigate the identified risks.

Because the risk profile is ever-changing, the company should use KRIs (Key Risk Indicators) and KPIs (Key Performance Indicators) to assess the effectiveness of its risk management program. These findings should be communicated to relevant stakeholders so that they can make educated decisions about how to deal with risks and how to allocate resources for risk management.

The risk management program also aims to identify risks caused by cyber attacks so that appropriate security solutions may be implemented to minimize them. The risk management program guarantees that vital business functions and the infrastructure that supports them are adequately protected by lowering the risks they encounter. The ultimate purpose of the risk management program is for the organization to effectively address uncertainty while ensuring business continuity and maximizing opportunities for success.

Compliance:

The adherence of an organization to government laws, health and safety standards, or data and security regulations is referred to as compliance. Depending on the industry in which the company operates, it may be obligated to follow specific laws and regulations. An efficient compliance management program assists an organization in having a strong business reputation and avoiding legal liabilities such as fines, lawsuits, reputational damage, and other financial losses.

A compliance management program keeps an effective balance between external and internal compliance standards. External compliance also referred to as regulatory compliance, relates to following government regulations and industry standards. In order to avoid substantial penalties, businesses are required to follow specific laws and regulations. Internal compliance, on the other hand, refers to adhering to the company’s policies, rules, procedures, and protocols. During an audit, the consultant checks for compliance not just with external legal and regulatory requirements but also with internal policies and procedures developed by the organization.

Organizations must ensure that organizational policies are created in accordance with compliance requirements and that employees are given enough guidance and training to ensure that these policies are followed.

GRC Capability model:

It’s critical for the GRC framework’s success that it’s implemented in a way that encompasses the entire company. The GRC Capability Model (also known as the Red Book) is an open source methodology developed by OCEG that combines the many sub-disciplines of governance, risk, audit, compliance, ethics/culture, and information technology into a cohesive approach. This model provides a roadmap for implementing the GRC framework and the tasks that should be completed at each stage. This model is made up of four key components, which are listed below:

Learn:

It is necessary to have an understanding of the following essential components of the organization during this phase of the model:

  • Important business functions of the organization, its business practices, culture, and the context in which it operates
  • The key stakeholders of the organization
  • The business goals
  • Strategic objectives

Business goals refer to the overarching goals of the organization about what it wants to accomplish in order to succeed. Strategic objectives are formed by breaking down the broader business goals into smaller parts and referring to the plan of how you will achieve those goals.

Align:

This phase ensures that all the components of the organization are working in agreement with each other and working towards achieving the business objectives. This phase requires the organizations to make sure that its activities are consistent with strategic objectives and that the strategic objectives are aligned with the broader business goals. It also necessitates examining the business risks, possibilities for success, compliance requirements, and corporate values as part of the decision-making process.

Perform:

This phase is focused on the creation of organizational policies and procedures, training and awareness programs, suitable controls to decrease overall risk to the organization, and the development of measures to detect new risks/threats to the business in a timely manner. This phase demands the organization to take activities that promote and reward desirable outcomes in the form of incentives, as well as prevent and remediate unwanted outcomes in the form of notices and warnings.

Review:

This phase necessitates a review of the design and operational efficiency of strategies and actions by the organizations. It also necessitates that organizations examine their overall objectives for relevance and appropriateness on a regular basis in order to improve their integrated GRC efforts. The model mandates that enterprises keep track of changes in internal and external requirements that may impact their GRC processes.

GRC Maturity Model:

To improve the efficiency and maturity of the GRC framework in the enterprise, GRC Maturity models demand organizations to steadily build leadership capabilities, improve business processes, and leverage efficient use of technology. It is divided into four sections:

1. Reactive or Ad-hoc: At this point, risks are dealt with as they emerge, and processes are carried out in silos across departments. Risk and compliance efforts are carried out in isolation, with no comprehensive plan in place to address these challenges.

2. Managed: At this stage, technology is being used to automate, coordinate, and improve GRC operations. These processes, on the other hand, are not linked to the company’s broader aims and strategic objectives.

3. Collaborative: At this point, GRC teams from different domains in the company interact to identify and manage risks in order to guide stakeholders’ risk mitigation initiatives. At this stage, measures can be taken to improve the organization’s GRC program’s efficiency.

4. Optimized: At this point, risk and compliance management programs are integrated into fundamental business processes in order to provide the most value to the company. The GRC objectives are well-aligned with the company’s overall business and strategic objectives. This stage gives the organization better visibility into the risks it faces as well as the opportunities for business growth.

Importance of GRC in cybersecurity:

In the context of cyber security, GRC can be characterized as a unified approach to governance, risk, and compliance that is supported by information technology. A robust GRC framework can help you take a proactive approach to deal with cyber threats. The use of GRC in cyber security allows for the inclusion of cyber risks in the overall risks that the organization faces. It also aids in the integration of data and privacy requirements into the organization’s governance, risk, and compliance processes. By incorporating data and security requirements into the entire GRC framework, company executives can make educated decisions about risks to data security and the adoption of cost-effective security controls to reduce those risks.

Cybersecurity risks are made up of three major components: people, processes, and technology. An efficient GRC program not only focuses on technological solutions to mitigate those risks but also ensures that employees perform their tasks in line with its security policies and that processes are safeguarded to decrease exposure to cyber threats.

The following are some of the primary drivers of the importance of GRC in cyber security:

Effective Risk Management:

The GRC team within your organization can work with IT security teams to develop a better knowledge of the extent and severity of cyber risks that could jeopardize your company’s objectives. The team then plays an important role in bringing these risks to the attention of senior management by successfully communicating the seriousness of these threats. This can assist business executives in determining the level of risk that is acceptable to the company, taking the necessary steps to reduce risk (e.g., avoid risk, transfer risk, accept risk, or mitigate risk), and allocating resources to deal with the it.

Regulatory compliance:

If the company operates in a highly regulated industry, complying with these regulations might be a difficult task. An organization must pay close attention to compliance standards and dedicate the necessary resources to remain compliant and to stay ahead of new laws and regulations. By establishing a dedicated GRC team, an organization can guarantee that compliance standards are incorporated into all business functions and supporting infrastructure. This method will enable the development of endpoint, application, and system security solutions that meet these regulatory requirements.

Data Privacy:

One of the key drivers of GRC’s growing prominence in the world of cyber security is data privacy. With the alarming rise in data breaches throughout the world, laws, and regulations are being enacted that require businesses to take stringent precautions to protect sensitive customer information and maintain data privacy. The GRC team in your company can work with IT security teams to verify that adequate security and protection mechanisms are in place while storing, processing, using, and destroying this data.

Vendor Risk Management:

The GRC team also aids IT teams in the evaluation and selection of potential vendors. In collaboration with upper management, the GRC team can design vendor selection criteria that can be used to analyze the total risk posed by outsourcing critical business services to third parties. The GRC team ensures that business objectives are incorporated into the vendor risk management process, such as over-reliance on a single vendor, business function disruption owing to a vendor’s inability to provide services on time, or if they go out of business unexpectedly, and much more. The GRC team can also assist with contract negotiations and ensure that the company’s business and security interests are protected.

Internal Auditing:

Internal security auditing for the organization can be supported by GRC team members. The GRC team can preserve and monitor critical company paperwork pertaining to its security processes, such as incident response exercises, patch management, security awareness training activities, third-party service level agreements, and much more. The GRC team can also guarantee that the organization’s operations are compliant with its security rules and procedures. All of this will make it much easier for the organization to pass an external security audit.

Best Practices for GRC implementation:

Some of the best practices that can help organizations implement the GRC framework are given below:

1. Identify the value of GRC implementation: Begin by determining the GRC’s value to your company. It entails identifying key company objectives and determining how GRC adoption might aid in achieving those goals.

2. Define risk and compliance requirements: Define the most important assets and critical business functions that need to be protected the most, as well as the risks that they face. Define the legal and regulatory compliance obligations that the company must follow.

3. Prioritize objectives and develop a phased approach: Implementing GRC framework can be a difficult task. It is easier to set targets that are achievable early on, allowing the business to reap the benefits of GRC and laying the groundwork for a more effective and unified GRC framework.

4. Determine the success measurement criteria: Determine how you will evaluate the success of each of the objectives you set earlier. The relevant stakeholders will be able to recognize their own projected benefits if you carefully formulate the success measurement criteria according to the various departments or business units with which you are dealing.

5. Choose the right GRC software solution: Choose a suitable GRC software solution that can help you reach your goals, has a user-friendly interface, and can be quickly integrated into your environment.

Interested in information security governance, risk and compliance? Enrol in MCSI’s MGRC - Certified GRC Expert.