Overview[edit]
Governance, risk management, and compliance are three related facets that aim to assure an organization reliably achieves objectives, addresses uncertainty and acts with integrity.[6] Governance is the combination of processes established and executed by the directors (or the board of directors) that are reflected in the organization's structure and how it is managed and led toward achieving goals. Risk management is predicting and managing risks that could hinder the organization from reliably achieving its objectives under uncertainty. Compliance refers to adhering with the mandated boundaries (laws and regulations) and voluntary boundaries (company's policies, procedures, etc.).[7][8]
GRC is a discipline that aims to synchronize information and activity across governance, and compliance in order to operate more efficiently, enable effective information sharing, more effectively report activities and avoid wasteful overlaps. Although interpreted differently in various organizations, GRC typically encompasses activities such as corporate governance, enterprise risk management (ERM) and corporate compliance with applicable laws and regulations.
Organizations reach a size where coordinated control over GRC activities is required to operate effectively. Each of these three disciplines creates information of value to the other two, and all three impact the same technologies, people, processes and information.
Substantial duplication of tasks evolves when governance, risk management and compliance are managed independently. Overlapping and duplicated GRC activities negatively impact both operational costs and GRC matrices. For example, each internal service might be audited and assessed by multiple groups on an annual basis, creating enormous cost and disconnected results. A disconnected GRC approach will also prevent an organization from providing real-time GRC executive reports. GRC supposes that this approach, like a badly planned transport system, every individual route will operate, but the network will lack the qualities that allow them to work together effectively.[9]
If not integrated, if tackled in a traditional "silo" approach, most organizations must sustain unmanageable numbers of GRC-related requirements due to changes in technology, increasing data storage, market globalization and increased regulation.
GRC research[edit]
Each of the core disciplines – Governance, Risk Management and Compliance – consists of the four basic components: strategy, processes, technology and people. The organisation's risk appetite, its internal policies and external regulations constitute the rules of GRC. The disciplines, their components and rules are now to be merged in an integrated, holistic and organisation-wide (the three main characteristics of GRC) manner – aligned with the (business) operations that are managed and supported through GRC. In applying this approach, organisations long to achieve the objectives: ethically correct behaviour, and improved efficiency and effectiveness of any of the elements involved.[12]