A Primer on Governance, Risk, Compliance (GRC) Software

In this blog we dive into the fundamentals of GRC Software, its importance and criticality for an organization and also discuss key elements that every GRC software platform should possess. Take a look at our GRC page to understand the various players in the market who offer cutting edge GRC solutions to enterprises and mid-market companies.

Imagine a family is vacationing in Spain. The day of their return back from from Spain to the United States, their flights get canceled because of a major outage at a lesser known cybersecurity company called Crowdstrike.

The outage takes down systems at major US airlines and causes a disruption in travel. Many parties are adversely affected. The family of course is impacted but as is the airline that was supposed to fly them back. Think about other cascading impacts at major international airports etc. For the airline, this exhibits a failure because of a counterparty going down. Hopefully the airline had put in place a robust GRC framework, well supported by robust GRC software and processes where they had built out and documented plans to mitigate such risks or deal with them swiftly if they occurred.

GRC software is technology designed to help organizations manage and streamline their Governance, Risk, and Compliance (GRC) processes in an integrated and holistic way. It provides a centralized platform for various departments (like IT, security, legal, finance, audit, and operations) to collaborate, share information, and manage activities related to GRC.

Before we proceed let us define each of the 3 major components of GRC which are Governance, Risk and Compliance.

Governance – Governance stands for a few things namely:

• Defines the overall framework, policies and processes that a organization uses to manage its operations, make decisions, allocate resources and achieve its objectives.

  
  

• Governance also defines who is accountable for what, how decisions are made and how information flows within the organization

Risk Management -

Involves assessing, analyzing, mitigating and monitoring potential threats and uncertainties that could negatively impact an organization’s ability to achieve its goals. Risks are often analyzed by those that are driven by internal business operations such as process failures, attrition of key talent etc. Risks also often emanate from external factors such as market volatility, credit risk, counterparty risk and risks caused due to lapses or hacks in cybersecurity.

Compliance –

This is all about ensuring an organization adheres to relevant laws, regulations, industry standard and internal policies. The risks for violation can lead to breakage in internal processes and above all expose the organization to regulatory scrutiny, fines, penalties, reputational damage and loss of trust. Level of compliance varies from industry to industry but some industries are highly regulated for example the Healthcare industry (HIPPA), Information Services (GDPR, Data Privacy), SOX (Financial Reporting), ISO 27001 (Info Security), PCI DSS (Payment Card Security) and others.

Need for GRC Software:

As mentioned in the prior section a organization can face disruption or severe penalties or reputational damage if they do not have in place a solid GRC framework. Going back to the Crowdstrike example, the company became liable to pay several hundred millions of dollars to its airline customers for the outage and also saw both reputational damage as well as a steep drop in its share price.

Mind you historically Governance, Risk and Compliance were managed in separate and often siloed departments that used manual processes such as spreadsheets and disparate tools driving issues like duplication of effort, manual errors, data inconsistency between departments, lack of single and unified source of truth and as a result more scrutiny from regulators and more frequent and higher exposure to fines and penalties.

Enter GRC Software:

GRC software has made a huge difference especially by offering a single platform solution for Governance, Risk and Compliance that drives a ‘single source of truth’ for all GRC related data. GRC software has driven automation away from excel and spreadsheets to modernized platforms further augmented by cutting edge reporting, analytics and alert mechanisms. This has helped organizations establish and implement robust governance policies, document, anticipate and mitigate risks ahead of time and stay compliance with rules and regulations thereby dramatically reducing internal costs (headcount) and external fines, penalties as well as disruptions to business.

Key elements of a GRC software platform:

The specific features will vary by vendor and often customized to clients needs. But generally the expectation from a GRC platform will entail the following:

1.     Risk Registers: Centralized databases to identify, categorize, and track all types of risks.

2.     Risk Assessments: Tools to perform qualitative and quantitative risk assessments.

3.     Control Libraries: Repositories of internal controls, mapped to risks and compliance obligations.

4.     Policy Management: Features for creating, publishing, distributing, and tracking acknowledgment of policies.

5.     Compliance Mapping: Ability to map regulatory requirements to internal controls and processes.

6.     Audit Management: Streamlines the internal and external audit lifecycle, including planning, fieldwork, issue management, and reporting.

7.     Third-Party Risk Management (TPRM): Manages risks associated with vendors, suppliers, and partners.

8.     Incident Management: Tracks and manages security incidents, breaches, or non-compliance events.

9.     Dashboards & Reporting: Customizable dashboards for real-time GRC posture monitoring and reporting.

10.  Workflow Automation: Automated routing of tasks, approvals, and notifications.

11.  Regulatory Intelligence: Often includes or integrates with databases of evolving regulations.

12.  Integrations: Connects with other enterprise systems (ERP, HR, IT systems, cloud platforms) to pull relevant data.

13.  AI/Machine Learning: Increasingly, GRC software uses AI for predictive analytics, automated document review, and intelligent recommendations.