Start-ups and established businesses alike are faced with a rapidly evolving challenge — what does Governance, Risk, & Compliance (GRC) management mean to the organization?
Many organizations use GRC programmes for tracking and compliance purposes. This is a good place to start, but refusing to evolve past this means they miss opportunities to use data across other GRC activities — such as using loss data to inform the risk assessment process, or other predictive analytics that can help companies prepare for the future.
Given these various ways GRC can be implemented in the modern age, how much would be enough? Is it possible that companies are overburdened by these expectations?
Opportunities and Risks Associated With Technology
It’s more than just employee management, quality control, and the nuances of the English common law. Alongside a wealth of opportunities, technology has also brought to the table the challenge of enforcing data protection, cybersecurity, and the liability of digitized intermediaries. It’s a big leap for industries and organizations — and now their GRC practises must make that leap as well, to move away from a classical document approach to a pragmatic and holistic view on the subject.
So it’s understandable as to why companies have not yet fully harnessed innovation and new technology for GRCs. They need to find people who specialize in technology’s regulatory regime, institution, and the technology itself to make effective use of it, and then plan out how technology will enhance their GRC programme in meaningful ways, through the use of AI, blockchain, and/or contract analytics. With constantly evolving technology, this can be difficult.
Technology is becoming increasingly necessary for robust GRC management. The trick is to remembering that technologies do not replace existing GRC programmes, merely enhance it, and that they need to implement adequate human governance over these technologies, because humans are still ethically and legally responsible for their technology, regardless of how autonomous it acts.
A World Without Borders
A borderless world means that organizations are no longer governed by purely domestic concerns. The bigger they grow, the more they may find themselves entangled in a confusing web of local and international laws, regulations, customs, and culture. To back this up, increased cooperation, between governments and investigators make cross-border investigations easier to conduct and substantiate, and more laws hold individuals — not just organizations — responsible for misconduct.
Finally, the use of third parties in multiple levels throughout the organization can be a source of misconduct or illegal activity. This can result in regulatory investigations, fines, penalties, and damage to the organization’ brand and reputation.
A Unified GRC approach
Many companies still have a disjointed approach to GRC — they use various technologies and processes that do not have a unifying technology, programme, or oversight. This makes it difficult for them to maximize their GRC programmes, because they run independent of one another. Corporations cannot assess overall programme effectiveness and any cross-cutting risks or deficiencies in governance that may impact them. When technology is used to consolidate information and review key dependencies and risks, corporations can then shed light on governance weaknesses and potential issues, and respond accordingly before it happens.
This is beneficial in two ways: for the employees and for the organization overall. When a GRC programme is implemented and works effectively, it provides employees with the information they need so they can work out what their organization expects of them. Providing policies, training, and maintaining constant communication shows that the organization is investing the time and effort into providing this information because it wants to guide its employees to conduct that supports the organization’s strategiv vision or objectives. This way, employees feel more comfortable reporting issues, and in turn they can be investigated and addressed immediately.
Next, proper GRC management can give accurate predictions and forecasts which are important for developing and implementing strategies. The more certain organizations are, the more precise their strategy becomes and the more aggressive they can be with their operational actions, with fewer back-up plans required.
Financial firms should look beyond words and be agile in compliance. Ultimately, a good GRC programme helps establish indicators that help organizations understand if the company is on course to reach its objectives and vision.
The Roadmap to GRC
As with many other prodcedures. GRC planning must start with the identification of the problem, the likelihoods of that problem occurring, and the severity of the problem’s impact if it ever occurs. This will require steady and neutral communication all over the organization.
Second, organizations must develop an appropriate framework or architecture for the overall programme. This will involve mapping apporpriate controls and management actions, including escalation procedures and the development of a clear communication strategy.
The proactive development of a specific and suitable mitigation strategy, complete with clearly identified actions and accountabilities, comes last. Unexpectedly crippling events — such as a data or privacy breach or rogue trader — exposes lapses in mitigation planning that could have been covered up with enhanced GRC implementation.
The ins and outs of GRC are a lot to take in at first. To make things easier, however, there! are certain areas that help make GRC implementation easier for businesses — crucial information for start-ups and SMEs looking for smooth organizational development.
This is where the Dubai International Finance Centre (DIFC) comes in. It is a trailblazer in GRC management, and has gathered knowledge from established financial jurisdictions to create a brand of its own. Following the English common law with an internationally regulated judicial system, it helps foreign investors settle down in the country. It is home to 1,750 companies and 21,628 professionals, some of which are consultancy firms that are willing to help entrepreneurs set up their business here (like us, 10 Leaves Limited.).
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