One of the biggest challenges in Governance, Risk, and Compliance (GRC) is demonstrating the success of a good program. An effective GRC program identifies key risks and implements controls where they will have the greatest impact.
When all systems operate seamlessly, events often go unnoticed, and the capability is typically gauged by the absence of significant incidents such as:
- Fraud
- Regulatory changes that could jeopardize a product line
- Successful network breaches
- Critical system failures leading to a work stoppage
Managing risks involves shedding light on optimization strategies and resource allocation rationales. We will outline three factors that determine the effectiveness of your GRC program so you can focus on optimizing control mechanisms and justifying resource allocation.
1. Optimizing resource allocation
As an effective GRC program matures over time, it frequently encounters the challenge of cost reduction pressure. Irrespective of the nature of the risk, a remarkable track record in managing it means that the risk is no longer perceived as a top-level threat to the organization. Consequently, there is a reallocation of funding to other areas. This scenario prompts important questions to consider:
- How should a team distinguish between essential program activities and areas of over control? For example, are there controls that can be stopped? What are the areas for legitimate savings versus essential concerns that the business depends on?
- If the team reallocated a certain dollar amount from a well-controlled risk to a new emerging risk, is that a good change? Is the net impact better for the organization?
- How does the team know whether the program is highly effective at mitigating all incoming threats, or not needed as a result of a change in the risk environment?
When a risk is effectively controlled over an extended period, it ceases to pose a top-tier threat to the organization. Consequently, decision-makers may perceive an opportunity to optimize resource allocation and redirect funds towards other critical areas of the business.
Essentially, the maturation of an effective GRC program prompts a thoughtful reassessment of resource allocation, requiring teams to navigate the delicate balance between maintaining essential controls, identifying opportunities for optimization, and strategically addressing emerging risks. This proactive approach ensures that the program remains agile, adaptive, and aligned with your organization’s GRC strategy.
2. Identifying key risks and impactful controls
Setting controls that detect, transfer, or mitigate an event is difficult, but possible. The key is to have your team identify the number and severity of near risk events — those that were detected and mitigated — and contrast gross and net impacts.
Setting controls that prevent an event on the other hand, is extraordinarily difficult. How does your team identify the number of events that were prevented because a control preempted it? How can your organization evaluate the effectiveness of a policy or entity-level control that changed the environment to prevent an attempt? Is that policy still important? Is the training still required? Can, or should, these programs ever be reduced, or do they just grow indefinitely?
Identifying key risks and the implementation of impactful controls involve a continual process of assessment, adaptation, and foresight. This involves not only measuring the success of controls in mitigating identified risks but also grappling with the complexities of preventive measures.
3. Maintaining excellent record keeping
The crux of an effective GRC program lies in meticulous record-keeping that documents and tracks all events. This includes critical aspects such as:
- Comprehensive documentation: One key feature of an effective GRC program is that it acts as the central repository for recording and cataloging all events, irrespective of their nature or magnitude. This is foundational to understanding the historical landscape of risks faced by the organization.
- Pre and post-treatment data contrast: An important component of effective risk management involves a comparative analysis that provides insights into the tangible impact of the risk treatment measures, highlighting areas of success and potential improvement.
- Quantitative ROI for program evaluation: By comparing the state of risk events before and after the implementation of your GRC program, your organization can quantify the program’s effectiveness in mitigating risks.
- Continuous program improvement: Organizations can strategically focus on areas that require improvement through a data-driven approach that allows for the continuous refinement of risk treatments and overall GRC strategy.
- Demonstrating program effectiveness: Whether for internal teams, executives, or regulatory bodies, a data-backed demonstration of an effective GRC program instills confidence in the organization’s risk management capabilities.
Build an effective GRC program with Resolver
The key to demonstrating the benefits of an effective GRC program is implementing a solution that meets your organization’s needs. Resolver’s Enterprise Risk Management (ERM) software is designed to empower organizations to not only navigate risks but to proactively master them.
From intuitive interfaces to powerful analytics that can be tailored to meet the specific needs and challenges of your organization, to delivering quantifiable results, from improved risk mitigation to streamlined compliance processes, our software could be your solution.
Don’t just manage risks; master them with Resolver’s ERM software. Watch a no-commitment showcase today to discover how we can elevate your risk management strategy, fortify your compliance efforts, and empower your organization.