While we witnessed the beginning of the industrial revolution 4.0 a couple of decades back, it has already paved the way for the next-generation technologies which focuses on harnessing resource synergy. Technologies are advancing at an unprecedented rate and, thus, we need to gear up for the next industrial revolution, i.e., IR5.0. As we advance technologically, the complexity of the data and processes we handle increases exponentially and, thus, arises the need for integration of governance, risk and compliance. Moreover, strict geographically varying regulations evolving around the globe, combined with high customer expectations, have provided an opportunity for service providers to build new business models that center on the GRC framework.
The current-generation, advanced technologies such as artificial intelligence (AI), machine learning (ML), internet of things (IoT), and data warehousing are high-risk technologies in terms of security and, thus, require a proactive GRC system in place to monitor them and mitigate risks associated with them.
Various cyber threats, including viruses, malware, ransomware, and phishing e-mails can lead to data privacy breach and theft of confidential data from organizations, which can lead to loss of business.
Moreover, even though GRC systems currently exist in isolation for various functions in a company, it is not efficient and generally incurs a very high cost. The integration of GRC solution aims at centralizing people, process, and technology to avoid duplication of efforts which in turn reduces the cost of business sustenance. For example, designing and implementing business policies in an organization and providing training to the employees with respect to these policies will fall under the same umbrella.
Now that we know an integrated GRC solution is important, let’s understand why it is essential.
- Secures Assets and e-Assets: Assets in an organization can be anything such as physical infrastructure, stored data, intellectual properties, data centers, human capital, and e-assets.
Companies require their assets to be protected from all kinds of threats such as natural calamity and cyber threats. There is close competition between the data protectors and the hackers these days. The point to be noted here is that as we develop more mechanisms to fight cyber threats, cybercrimes in themselves have evolved technologically. Even though government regulations and compliance risk standards help to determine and implement controls to secure these assets, a centralized system and process that can monitor the smooth functioning of business in real time and raise a flag in case of any issue are essential to reduce the various risk exposures of the organization.
- Regulatory Changes and Control Implementation: Regulations are not simple and common anymore. Each country has different regulations in place and the enforcement level of these regulation/s varies to a large extent. For example, companies dealing with Indian citizens’ personal data do not have the necessity to adhere to any strict regulations, whereas companies dealing with Europeans’ personal data need to comply with GDPR. Since MNCs generally operate in different regions, implementing of controls requires identifying commonality between different regulations and standards to ease the process of compliance. Hence, it becomes efficient to handle controls and control failures when the integration of GRC is done.
- Allows Process Streamlining: Businesses these days are trying to channelize their processes to reduce the redundancy of resources and wastage of time. Since the USPs of similar businesses tend to converge, businesses focus on process streamlining to get a competitive edge in the market. The integration of GRC helps to identify irregularities, threats, and redundancies. Thus, it gives an edge over the competitors and this standardization helps to reduce effort by identifying common risks and implementing common controls across different functions.
- Cost Saving and Revenue Generation: A couple of years back, risk management and compliance were considered to be a part of the cost center. Earlier, companies used to spend on GRC without understanding the financial benefits. Complying with standards was considered a mere advantage and not a need. But the scenario has changed drastically today. GRC acts as a cost saver for the customers by ensuring automation of common processes and implementation of common controls to mitigate risks. From a service provider’s perspective, GRC acts as a revenue generator because it has become a necessity for all the customers, and expert services are in huge demand. Thus, it has a direct impact on the P&L statement of the companies.
- Fulfill Stakeholder demand and Set Working Standards: The ultimate aim of all the stakeholders is for the business to flourish under all the circumstances such as technological disruption, privacy invasion, data access breach, financial instability, natural disasters, and so on. These risks cannot be completely avoided, but can be definitely tackled in an efficient manner to have a minimum business impact. Training and employing experienced professionals can help in setting a base standard for working. Also, BCP/DR, a part of GRC, ensures that the risks are foreseen and appropriate measures are taken to minimize the impact on business continuity. Thus, the integration of GRC primarily aids in uninterrupted business continuity.
It is vital to understand that the integration of GRC is a continuous process. People, process, and technology need to be synchronized continuously in order to achieve business goals. A company’s GRC strategy must continuously evolve along with the business needs, to mitigate the risks and threats associated with its different line of businesses. Thus, instead of looking at the integrated GRC as an exercise mandatory for complying with regulations, it should be considered an important factor for survival and growth of the business.