3 Trends Changing How We Think of GRC
Driven by technology advances, GRC is going through a sea change. Practitioners are completely rethinking the GRC infrastructure and will use digital transformation and data analytics to make their programs far more responsive to the evolving needs of their organizations. GRC practitioners who ignore this transformation do so at their organizations’ peril.
Change in any industry tends to be evolutionary, but 2017 is likely to be a transformational year for GRC. The extraordinary increase in the amount of data organizations need to analyze and the widespread adoption of cloud and mobile technologies as a means to spur greater information collection, sharing and collaboration are driving organizations to rethink their entire GRC infrastructure. The goals include gaining a deeper understanding of risk drivers, developing a more complete picture of the organization’s GRC profile and embedding GRC into the everyday activities of the business. Thus, I believe the following three trends will dominate GRC infrastructure discussions in 2017.
#1: Enterprises acknowledge that effective GRC depends on an architecture, not a single application
Today’s GRC applications are pretty good at exposing operational risk, but individually, they simply don’t present a complete governance, risk and compliance picture. To meet increasing demands from regulators and the board, enterprises will begin developing a GRC architecture that includes both traditional GRC platforms and new tools that:
- pull data from internal systems such as information security and ERPs and
- retrieve external content such as regulatory content feeds.
The GRC architecture will also require tools that collect and consolidate market and credit risks, as well as strategic risks surfaced by business intelligence (BI) tools and other analytics. This consolidation will enable an integrated GRC environment where “governance” includes performance metrics such as sales and financial results. With this new, comprehensive architecture, organizations will be able to start building presentation layers that create far more useful risk indexes based on all relevant source systems, producing a more complete GRC picture.
#2: Organizations will leverage digital transformation to improve governance
One element of the digital transformation initiatives being promoted at many enterprises is improved information sharing and collaboration. As a result, traditional GRC programs will be able to incorporate more of the affirmative governance components of their operations, including corporate culture and business achievements and successes. At the same time, improved information sharing across digital platforms will enable organizations to embed GRC program elements into their enterprise applications, such as Microsoft SharePoint, creating mash-ups of both structured GRC data and unstructured business data that enable employees to access this information in the course of their daily activities. This will allow them to work in ways that are more consistent with governance best practices, thus doing a better job at protecting stockholder value even as they become more effective and efficient at how they sell and deliver to their customers.
#3: Organizations will use data analytics to drive risk decisions
The evolution of technology, including in-memory computing (IMC), visualization tools and mobile reporting services, will allow organizations to aggregate and analyze more data from more source systems much faster and more effectively. This – combined with the evolution in methodologies and business rules that enable the aggregation of data in ways that make the best use of analytics – will allow organizations to begin automating many of the traditionally manual risk-scoring assessments and thereby automatically expose more potential risk hot spots in the organization.
Evolving regulations around the world – especially with regard to data privacy, combined with cloud storage, mobile access and the overwhelming increase in digital information – have created new challenges for risk management functions. At the same time, it’s exciting to see the way assurance professionals and lines of business are starting to work together more effectively to deploy technologies and new strategies to meet the challenges head on. I am optimistic that we will look back at 2017 as the year when we stopped viewing GRC as no more than operational risk management and instead began to embrace broader technology architectures to create a digital workplace to manage GRC.