The pandemic has shown how businesses are complex, interconnected and constantly evolving. This poses a significant challenge for governance, risk management and compliance (GRC) teams across the business. It is imperative for the organization and leadership to be aware of and have access to data on the big picture of risk across operations, business processes, suppliers, systems and data. The goal has to be to establish a GRC framework that effectively and efficiently reconciles strategy, business process, information and technology in a core foundation.
Ever increasing interconnectedness and complexity
The world is evermore interconnected making business complex. Organizations of all sizes are burdened by exponential changes in regulations, globalization, supply chains, business relationships technology and data. Managing the change and complexity is a constant challenge for boards, management and GRC professionals across the organization.
A business that is in constant flux as a result of complexity faces an increased amount of chaos and uncertainty.
For organizations to remain agile and competitive operations and relationships must be dynamic and distributed increasing the breadth and depth of risks that need to be monitored. Regulations have multiplied in many industries as have the resulting penalties, fines and censure.
In many cases the pandemic has increased the already distributed operations and businesses have had to adapt away from the traditional model of physical offices and conventional workers. Boundaries are blurred and supply chains are multi layered leading to organizations having to dealing with constant and continuous change upstream and downstream.
Adding to the dynamic and distributed organizations is the explosion in big data which means businesses have to factor in dealing with immense volumes of structured and unstructured data across business processes that may span different jurisdictions and regulations. Organizations have had to be adept and agile to deal with the evolution.
Such distribution, disruption and dynamism mean a well thought out and established GRC framework is essential to ensure businesses have timely and accurate GRC data across operations, business processes, relationships and systems to see the big picture of risk and its impact on organization performance and strategy.
Attempting to manage GRC using point solutions or spreadsheets is a fallacy and prone to fail as has been proven by past crisis events and corporate debacles. Disjointed and distributed systems lead to disassociated data that only provides a fragmented picture or worse compounds the likelihood of missing the big picture on risk and compliance across the enterprise. A well thought out and executed GRC framework ensures GRC succeeds when risks are addressed collectively as a whole. GRC is at the core of the interactions and relationships of cause and effect across strategy, process, transactions, information, and technology supporting the business and requires an integrated GRC framework approach.
GRC is neither new nor optional, every business already practices some form or another of GRC ranging from the rudimentary to the ad-hoc to the agile. Governance, risk management and compliance the components that make up GRC are a mandated, necessary and intricate part of business. The core purpose of a good GRC framework is to deliver effectiveness, efficiency, and agility to the business in managing the interrelationship of performance, risk, and compliance. This can be achieved using a strategic approach that connects the enterprise, business units, business processes, and information to enable transparency, discipline, and control of the ecosystem of business and operational activities.
Interconnectedness and complexities mean that businesses are chaotic and non-linear directly impacting GRC. This non-linearity leads to situations where cause and effect are not and that the interconnections can and do result in exponential unpredictable risks.
For business and management to execute on strategy, they not only need visibility of the individual risk but also the interconnectedness of the apparently disparate risks. Relying on a rudimentary point solution or a GRC platform that simply manages workflow, content and tasks will fall significantly short.
A good GRC architecture and framework will encompass:
Knowledge is power and the business needs enterprise-wide visibility and control across its own operations and the extended enterprise. The ability to see the complex interrelationships between operations, legal, regulatory and finance risks in the context of strategy, performance, and objectives is a key factor.
Strong risk management and GRC form vital components that align business strategy and objectives in order to identify and capitalize on opportunities while reducing overall risk exposure.
It is imperative that business decisions are made with a full view of risk that is aligned to objectives. A good framework facilitates this by integrating risk with the decision-making process.
All businesses are tasked to protect value and reputation of the organization while managing costs and lowering losses.
OCEG (Open Compliance and Ethics Group) defines GRC as:
A capability to reliably achieve objectives [governance] while addressing uncertainty [risk management] and acting with integrity [compliance].
Breaking this down – Governance is when objectives are achieved reliably, risk management is where uncertainty is understood and addressed and compliance requires to act with integrity.
If you or your organization is looking to learn more about “What should a good GRC framework and architecture include”, we invite you to explore Maclear KaizenEvo® and the Maclear GRC Suite™ by visiting https://www.maclearglobal.com. Our comprehensive range of solutions are designed using best practices with built-in integration to reduce risk, improve performance, and enable strategic decision-making.
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What should a good GRC framework and architecture include?
The pandemic has shown how businesses are complex, interconnected and constantly evolving.
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