At its basic level, governance is the set of rules, policies, and processes that ensures corporate activities are aligned to support business goals. It encompasses ethics, resource management, accountability, and management controls.

Governance also ensures top management can direct and influence what is happening at all levels of the corporation and that business units are aligned with customers’ needs and overall corporate goals.

Effective governance creates an environment where employees feel empowered and behaviors and resources are controlled and well-coordinated. One goal of governance is to balance the interests of the many corporate stakeholders, including top management, employees, suppliers, and investors.

To maintain this balance, governance can help ensure, for example, that contracts between the company’s internal and external stakeholders are in place for the fair distribution of responsibilities, rights, and rewards. This also includes procedures for reconciling conflicting interests among stakeholders and processes ensuring that supervision, control, and data flows function as a system of checks and balances.

Governance provides control over facilities and infrastructures, such as data centers, as well as oversight of applications at the portfolio level.

Above all, governance is implemented to provide accountability for conduct and results. Conduct can be managed through enforcement of ethical business practices and corporate citizenship rules. Good governance defines jobs based on lines of business and evaluates employees based on results achieved rather than based on responsibilities.

Risk management is the process of identifying, assessing, and controlling financial, legal, strategic, and security risks to an organization. To reduce risk, an organization needs to apply resources to minimize, monitor, and control the impact of negative events while maximizing positive events.

At the broadest level, risk management is a system of people, processes, and technology that enables an organization to establish objectives in line with values and risks.

The goal of an enterprise risk management program is to achieve corporate objectives while optimizing risk profile and securing value. Part of that task is prioritizing stakeholder expectations and delivering reliable information to those stakeholders.

A risk management program also applies to identifying cybersecurity and information security threats and risks—such as software vulnerabilities and poor employee password practices—and implementing plans to reduce them.

The program should assess system performance and effectiveness, assess legacy technology, identify operational and technology failures that could impact the core business, and monitor infrastructure risk and potential failure of networks and computing resources.

A risk assessment program must meet legal, contractual, internal, social, and ethical goals, as well as monitor new technology-related regulations. By focusing attention on risk and committing the necessary resources to control and mitigate risk, a business will protect itself from uncertainty, reduce costs, and increase the likelihood of business continuity and success.

Compliance involves adhering to rules, policies, standards, and laws set forth by industries and/or government agencies. Failing to do so could cost an organization in terms of poor performance, costly mistakes, fines, penalties, and lawsuits.

Regulatory compliance covers external laws, regulations, and industry standards that apply to the company. Corporate or internal compliance deals with rules, regulations, and internal controls set by an individual company. It is important for the internal compliance management program to be integrated with external compliance requirements. The integrated compliance program should be based on a process of creating, updating, distributing, and tracking compliance policies and training employees on those policies.

To create an effective compliance program, organizations need to understand what areas pose the greatest risk and focus resources on those areas. Then, policies should be developed, implemented, and communicated to employees in order to address those areas of risk. Guidance should be developed to make it easier for employees and vendors to follow compliance policies.

A GRC framework helps organizations establish policies and practices to minimize compliance risk. IT and security GRC solutions are focused on leveraging timely information on data, infrastructures, and virtual, mobile, and cloud applications.

Additionally, an organization’s GRC program should improve efficiencies, reduce risks, and increase performance and return on investment (ROI). Businesses will develop and use a GRC framework for leadership, the organization, and the operation of its IT areas to ensure that they support and enable the organization's strategic objectives. This includes correlating information in the context of business processes, policies, and controls, as well as activities carried out by IT, finance, HR teams, and C-suite executives.

Efficiency
 

Risk assessment, compliance management, internal audits, and other GRC activities can be time-consuming and resource intensive when done without a GRC software platform. A GRC platform can help companies break down silos in processes and data, comply with regulations, and monitor, measure, and predict losses and risk events.

It also can help companies manage the lifecycle of financial and artificial intelligence (AI)-driven models and improve IT compliance and controls. Companies can even measure the impact of regulatory and business requirements to policy framework and support automated measurement and IT controls through integration with third-party products.

Risk assessment and reduction
 

GRC enables companies to establish, automate, and manage risk assessments and risk reduction. And, data from a GRC platform allows companies to make more informed decisions and then allocate resources to mitigate risks. 

Audits for regulations like the Sarbanes-Oxley Act are the milestones by which GRC operates, and departments need to maintain and protect sensitive details—including invoices, human resources records, and financial reports—to be prepared for those audits.

An effective GRC program can be particularly helpful for companies that have experienced a significant compliance or risk event or failure. Additionally, businesses that do not have confidence in their compliance or internal and external financial risk reporting and visibility can look to a GRC model to help fix and monitor redundant control sets and ineffective frameworks to avoid repeatable risk concerns. 

Strategic support for performance and ROI
 

At times, companies may find it difficult to allocate resources, address conflicts of interest, and measure success. This can be the result of grappling with the increasing costs of addressing risks and requirements, while facing the challenge of managing the exponential growth of third-party relationships and risk.

However, companies can set and monitor clear objectives with metrics generated from a GRC platform. This will help increase their performance and improve their ROI.

GRC tools are a way to manage operations and ensure a company is meeting compliance and risk standards. Tools can also help determine and mitigate risks associated with use, ownership, operation, involvement, influence, and adoption of IT within a company. GRC tools should encompass operational risk, policy and compliance, IT governance, and internal auditing.

Most GRC tools have some of the following features:

• Content and document management that helps businesses create, track, and store digitized content
• Risk data management and analytics that help to measure, quantify, and predict risk—and determine steps to reduce it
• Workflow management to help companies establish, execute, and monitor GRC-related workflows
• Audit management to organize information and simplify processes for conducting internal audits
• A dashboard that provides a central interface where key performance indicators relevant to business processes and objectives can be monitored in real-time

Effective GRC tools create and distribute policies and controls and map them to regulations and compliance requirements. They help assess whether controls have been deployed, are functioning correctly, and are improving risk assessment and mitigation.