At the start of the millennium, governance, risk, and compliance management (GRC) was still very much in its infancy. Fast forward to 2022, and it is no longer seen as a siloed process. Now, it is an organization-wide concern that permeates every decision from C-suite to the shop floor. And its evolution shows no sign of slowing down as modern solutions are changing the way that GRC processes are delivered and embedded into day-to-day operations within organizations.
So, what does the future look like?
In an era where risk is accelerating, we need to look back to the past in order to understand the challenges that will shape tomorrow’s landscape.
Governance, risk, and compliance management in the past
Historically, the governance, risk, and compliance management market has been underserved. If you look back to the turn of the century when the market first began to form, everyone was doing things differently, and there was no standardization or best practice for companies to follow. You’d find that different companies were doing things differently, performing some aspects of the wider GRC framework while ignoring others.
This is largely due to how GRC came into operation. It never started from a clean slate nor went in a single direction. Instead, it formed out of various concerns ranging from the 2001 Enron scandal and the introduction of SOX to the 2008 financial crisis to concerns over financial controls and the assurances over the filing of listed companies.
Since then, there has been a huge amount of evolution in the GRC market as risk management methodologies and processes become increasingly more sophisticated to provide quantitative outputs.
There’s far less ambiguity today than there was in the past thanks in no small part to the software solutions that have sprung up to help companies manage their GRC processes.
Yet there is still a misalignment between GRC needs and much of the software that is being used to help address them. While organizations are crying out for functionality and flexibility, many are still left wrangling incredibly complex platforms that aren’t delivering the business quantifiable and measurable outcomes they need today.
Governance, risk, and compliance management in the present
The good news is that there is now significant investment in GRC within organizations. Companies are adopting software, implementing policies, and putting the resources in place to implement effective GRC systems. Clearly, much of that has been driven by compliance and contractual requirements. But businesses have also started to realize the value of GRC to their bottom lines.
GRC is not a tick-box exercise
Nevertheless, in the current landscape, many organizations still face challenges when it comes to utilizing their governance, risk, and compliance management system effectively. Part of the problem is that GRC is increasingly siloed. At best, it’s integrated across an organization; at worst, it’s treated as little more than a tick-box exercise – in other words, just doing enough to ensure the company doesn’t get in trouble instead of adding business value, e.g. improving security or speed at which suppliers are onboarded. This can lead to ineffective risk management as organizations only have individual pieces of the jigsaw rather than the whole puzzle. Ultimately, this means that they can’t fully appreciate the full spectrum of risks they face.
GRC software is not enough on its own
The siloed nature of GRC processes also creates unnecessary complexity. If each team or sector has its own risk management processes, it can create a confusion of mismatched systems and frameworks. That’s why many organizations turn to software in the hope that it can help to bring everything together in one place.
However, software alone cannot solve this problem.
Without first addressing the root cause of an organization’s issues, implementing software only exacerbates it – becoming a huge cost center in the process.
Governance, risk, and compliance in the future
Technology is helping to shape the future of GRC. Increased automation means that organizations can not only see the bigger risk and compliance picture but respond to issues in real-time.
AI will be a huge driver for change and looks set to become an increasingly prominent part of the GRC landscape. It’s critical because it has the potential to truly automate the GRC process and apply learning or past behavior to future threats.
AI will be a huge driver for change.
Perhaps most interestingly, AI also means we can stop working reactively. Typically, at the moment, we see that organizations aren’t using GRC to solve any tangible business problems but are instead looking to tick a box for auditors or regulators. All too often, their highly skilled experts are reduced to mundane admin tasks centered around reviews and checking. But, by using the latest advancements in AI and machine learning, we can free these experts up to work proactively, using data and insight to solve specific business challenges.
GRC needs unique business context
To truly harness the potential for the next generation of technology, however, more needs to be done to contextualize GRC and its value to the business. We need to see a shift toward outcome-driven metrics that translate risk management into tangible operational impacts. The idea is that by understanding the impact that certain risks might have on your bottom line, you can better understand where to invest your resources and what your security priorities should be. This way of thinking also creates a much clearer business case for GRC, one that embeds it within decision-making across the entire organization.
One thing that’s clear is that the future of governance, risk, and compliance management exists at the intersection between technology and expertise. In order to achieve desired outcomes faster and with greater confidence, organizations will need to combine the automation and AI capabilities of the latest software with world-class insight in order to make decisions that ensure long-term success.