This Post is Also Published on Medium
Governance, Risk Management, and Compliance, or GRC, is a loaded word that is inevitable for any organization, startup, or established enterprise. “Governance” is about managing the operating processes in an organization, such as hiring a new person, choosing the right supplier, etc., in a way that aligns with the business objectives. “Risk management” refers to identifying and addressing various threats to the business – financial, security, legal, etc. And “compliance” is conforming to local and global regulations, such as PCI DSS, AML, HIPAA, and so on and so forth. Several frictions such as fragmented data, processes, and tools impede forming a comprehensive GRC ecosystem, thereby making it cumbersome to set up and manage GRC processes. Fortunately, Web 2 and 3 technologies such as Cloud Computing, Big Data, AI, and Blockchain can help make the GRC adoption holistic, effortless, and seamless.
What Are the Requirements of an Effective GRC System?
The last few years have seen tremendous evolution in the way businesses operate. Working from home became a necessity two years back, which warranted for new operating procedures to be put in place. Similarly, with every passing day, risks that are more sophisticated than ever are emerging that mandate proactive and equally innovative and trailblazing solutions. For instance, several versions of “decryption keys for crypto” ransom attacks seem perpetually in the news. Furthermore, with new, emerging business models, new compliance requirements are also materializing. For instance, almost every nation requires businesses handling crypto to be compliant with the new rules they have set forth. So, whether you are a well established company or a startup figuring out the nuances of correctly running a business, it is vital to have easily adaptable, agile GRC processes in place.
All Inclusive and Germane Data
The governance and risk management executives have to be equipped with an integrated solution that helps them in holistic, informed, and efficient decision making. Such a nimble system requires flexible technologies with access to a comprehensive set of data. Data silos and fragmentation among divisions and departments have to be eliminated, and a single source of truth has to be made available. It is also essential to identify and collect only relevant data instead of amassing significant amounts of data that are not helpful.
Rich and Contextual Visualization
Collecting volumes of data will not serve any purpose if organizations are unable to make any sense of it. Deriving context and creating meaningful dashboards to visualize the data would improve the usability of the data and lead to better collaboration among various stakeholders.
An Adaptable Solution
The ever evolving GRC landscape has necessitated agile systems that can quickly adapt. Protracted redesign or re-coding every time a new regulation comes into force is simply unacceptable. Furthermore, the system has to be dynamic, event driven, and respond in real time.
At the same time, it is essential that the GRC systems remain open and seamlessly integrate with non risk, every day IT systems such as human resources, procurement, sales, etc. It would expedite data collection and also make the implementation of the GRC framework frictionless and efficient.
Fit Into Everyone’s Budget
While building a robust GRC system is vital, it is essential to consider the money needed to develop such a framework. Higher costs would deter cash strapped companies from putting some serious thought into creating an effective GRC strategy, which would lead to technical and operational debt in the future.
How Web 2 and 3 Benefit GRC?
Any technology used should bring measurable increases in efficiency to governance, risk management, and compliance operations.
An Accountable, Verifiable Data Source
Instead of siloed databases for storing GRC related information, a distributed ledger, which can be independently updated and verified, could not only bring data congruence but also significantly reduce operational costs. Blockchain technology can bring the accountability and trustworthiness required in an efficient GRC framework. With blockchain, sharing the information with regulators can be more real time and reduces costly and time consuming paperwork. Yet, caution has to be exercised while adding data into the blockchain. One needs to be fastidious while determining what data goes in and what data should stay out due to the immutability nature of the technology. Putting sensitive data could lead to additional compliance issues.
Deriving Context and Creating Meaningful Visualizations
AI and machine learning can come in handy in digesting and contextualizing swaths of data. Moreover, today several big data solutions exist that process not only structured, relational data but also unstructured, random inputs. Once relevant information is retrieved from the noise, analytics applications can be used to develop rich, value added dashboards that provide necessary insights to executives at all levels of organizational hierarchy.
Flexible and Responsive GRC System
Building GRC applications leveraging microservices architecture would help in quickly adapting to evolving requirements and prevent long drawn IT cycles. Similarly, having a potent DevOps strategy would streamline the development, testing, and deployment to production processes. Furthermore, employing low code platforms for application development and automated testing tools would speed up the build and test cycles.
Event Driven Risk Assessment System
For handling risks such as fraudulent transactions, and suspicious data access, it is essential to monitor everyday operations. Several cloud providers offer monitoring solutions that can be easily integrated with the rest of the technology stack to provide robust mechanisms to check for abnormalities. AI and machine learning can also be leveraged here to proactively identify and flag abnormal behavior.
At the same time, notifying necessary parties and taking immediate remedial actions to mitigate the risks is vital. Scores of products exist that enable multichannel notifications that can be triggered in real time based on events. There are also solutions that allow users to preconfigure actions to be initiated in the event of malicious activities.
Designing An Open System
A GRC system with bridges to easily connect with everyday transactional systems helps for seamless adoption of the framework and also makes it easy and fast to make incremental changes in response to changing GRC ecosystems. An open and standardized API approach would help disparate systems integrate without hassles. Additionally, building an automated end-to-end solution using Robotic Process Automation would avoid human errors in cascading GRC requirements into transactional applications.
Building a Cost Effective Solution
Again, cost should not be ignored while implementing a robust GRC framework. At the same time, overzealous razing of spending might unwittingly result in increased fraud and hacks, thereby shooting up your fraud prevention costs. Cloud computing could offer economical options compared to building the systems ground up in one’s own data centers. First, the total cost of ownership (TCO) is reduced as there is no need to pay for data center space, power, and cooling. Also, many of the cloud providers enable automatic scaling of infrastructure resources, thereby preempting costly over-purchasing of costly processing and storage systems. Alongside, most cloud providers are already compliant with several regulatory requirements such as HIPAA, PCI DSS, etc. They also offer data residency and sensitive data protection solutions that makes it even more attractive to build a powerful, all inclusive, and cost effective GRC solution.
Having an efficient and effective governance, risk management, and compliance ecosystem is vital for businesses, startups, or established enterprises. Regulatory and cost pressures are inescapable for any business, but with the right technologies, enterprises can lessen the burden and build a holistic GRC framework.