Why a GRC Software Solution Is Vital For Your Business
As we see from the 2019 Cost of a Data Breach Report, more than 500 companies around the world suffered a breach over the past year. Organizations are now creating an urgent demand for reliable, feature-rich, and trusted solutions that meet the GRC (governance, risk, and compliance) regulations, forecast risks, identify problems and mitigate them before they happen.
The report data is based on hundreds of cost factors, including legal, regulatory, and technical procedures to the loss of brand equity, customers, and human productivity. The highlights from this year’s report include:
- For the last nine years, the healthcare industry suffered the highest cost of a breach—almost $6.5 million on average (60% more than other sectors in the survey).
- Over 50% of data breaches were caused by malicious cyberattacks and cost $1 million more on average than those that resulted from accidental causes.
- Big breaches of more than 1 million data records cost companies approximately $42 million in losses, and breaches of 50 million data records can cost companies $388 million.
- Companies that have an incident response team have reduced those costs to $1.23 million on average.
- The average price of a breach in the US is $8.19 million, more than double the worldwide average.
Another report from IBM Security and Ponemon Institute examined the financial consequences of a data breach and how companies can reduce the impact.
An effective GRC platform helps companies to identify the risks before they occur, centralize the entire program in one place, and integrate risk management across all business procedures.
What is GRC Software?
As any business grows, so do the risks and challenges. To overcome the difficulties and find new opportunities, companies need to improve the set of processes known as governance, risk, and compliance. And if you look at the recent studies, you will notice a big rise in the GRC platform market across the globe, with US$ 24.9 billion in 2018, and it’s expected to reach a value of US$ 47.1 billion by 2024.
Although many definitions exist, we picked the one proposed by Nicolas Racz, Edgar Weippl, and Andreas Seufert in their recent research paper “Frame of Reference for Research of Integrated Governance, Risk and Compliance (GRC).” In this document, GRC is defined as:
How a GRC Platform Works
As we mentioned above, GRC software helps companies to automate, streamline, and simplify the activities related to governance, compliance, and risk management. The end-users are compliance officers, internal and external auditors, risk managers, and other accountable persons.
GRC solutions are supposed to cover the following basic areas:
- Audit management automates the work of internal audit teams, optimizing resources and productivity, and eliminating recurring audit findings.
- Internal policy management helps to protect a company from internal threats, such as theft, embezzlement, and mismanagement of funds by employees, suppliers, or customers.
- Compliance management is the process by which company managers plan, organize, control, and lead activities to ensure compliance with laws and standards.
- Risk management refers to the practice of forecasting potential risks, analyzing them and taking preventive steps to reduce the risk.
- Information security management (ISM) is a set of procedures for the systematic management of an organization’s sensitive data, minimizing risk and ensuring business continuity by pro-actively limiting the impact of a security breach.
In an ideal world, GRC solutions are aimed at combining all these processes and efficiently handling compliance and risk documentation, workflows, assessments, rich visualization of controls and performance indicators, instant checks, and reports.
Today, companies face multiple issues when trying to handle their governance, risk, and compliance activities. The table below shows that 93% of board-level executives worldwide are not satisfied with their existing system of risk management and seek to review and approve the organization’s formal risk governance framework.
Current Challenges in GRC Solutions
Recent history shows that compliance requirements tend to be cumulative. When GDPR came into effect, it didn’t replace the Sarbanes-Oxley Act. Now, both sets of standards are required. As a result, managing GRC can be an endless game of catch up.
As companies experience multiple concerns and difficulties in their endeavors to establish the proper functionality of governance, risk, and compliance activities, we have provided an outline of the most prevalent pitfalls in building robust GRC software.
Challenge #1: Never-Ending Regulatory Requirements
Regulatory burdens grow year after year, and it’s no wonder that compliance officers ranked ongoing regulatory changes as their biggest problem in a recent survey.
With limited resources and compliance deadlines looming, companies often find themselves confused by new and changing regulatory requirements. An effective GRC strategy requires a reliable and consistent system for monitoring regulatory developments and addressing any compliance issues.
Solution: automated compliance alerts
Manual methods can’t keep up with the pace of regulatory changes. When choosing compliance management solutions, look for software that offers automatic alerts for upcoming law and regulation changes, compliance due-date notifications, and other task management activities.
Challenge #2: Data Silos
Since many organizations function in silos—where each business department has its own set of compliance regulations, vendors, and processes—the critical information may be stored in multiple locations, resulting in duplicate or inconsistent data.
This complicates management, prevents information sharing between units, and may even hide potential risks. Data breaches demonstrate that a lack of oversight regarding your company’s data and IT functions can be high-priced and damaging to your reputation.
Solution: Centralized data management
Tracking important information across multiple documents, computers, and storage methods is time-consuming and causes data management chaos.
A centralized digital database where contracts, policies, financials, third-party information, and other types of data are kept ensures you can find what you need and when you need it. Plus, you can securely access essential data from anywhere you have an internet connection.
Challenge #3: Lack of Visibility & Inadequate Reporting
Many companies try to cope with a lack of visibility and transparency in their business processes, vendor relationships, risk-mitigation, and other critical factors of IRM (integrated risk management).
Because different business units use their own processes and tools, it’s hard to evaluate risk and compliance holistically. Combining analytics and reporting under one platform enables developing data-driven action plans to fight any GRC challenges.
Solution: Robust reporting solutions
A consistent reporting process leads to transparency and communication with stakeholders and allows your business to make well-informed, strategic decisions.
Key Trends in the GRC Software Market
The GRC software market stands out with key change drivers. The majority comes from the emerging technologies and actualization of the new organizational needs. However, there is one trend outranking others with a higher prevalence; it’s the customers who run the world.
The Customers’ Portrait
Today, a larger share of businesses concentrate on their image, brand, and trustworthy relationship with its end-users. Modern social media provides a venue to share one’s opinion with millions of people in one click.
Customers are keeping their position firmly in the market and enjoy affecting global business behavior. Thus, the first trend puts the customer on the top of the list. GRC experts have to ensure mandatory compliance while also strengthening and retaining people’s confidence and trust.
Ease of use becomes customers’ primary criteria when choosing a GRC solution. With the need to improve how companies manage their compliance, risk, and audit activities, consumers demand that top-notch solutions are easy to use.
The major trends include:
- Emerging technologies. Chatbots and natural language processing (NLP) techniques win their place in many industries. They provide safer engagement activities seamlessly integrated into data protection systems. Using ML (machine learning) tools, risk managers can improve the accuracy and timeliness of risk detection based on the predictive analysis algorithms.
- Need for the organizational culture of integrity. Cyberattacks are growing exponentially, and it’s hard to overestimate the role of personal accountability in supporting a company’s security. The accent moves from “what” we offer to “how” we offer.
- Need for strengthening and integration of IRM processes. Risk programs and metrics are now the subjects of strategic objectives. According to many executives, the most far-reaching adverse outcomes caused by non-financial security incidents are the eroding consumers’ trust and shareholders’ value.
- Need for flexible and proactive GRC management. Living in the age of never-ending radical change, companies need agile and proactive risk management to keep a strong voice in the market. That’s why there’s a demand for proactive risk anticipation, increased cooperation integrity, and agile action programs.
Demand for security by design. Security by design is a new approach in software engineering where the risk thinking is built-in from the onset, enabling global innovation with confidence. In such an approach, the alternate security methods are first considered. The best among them are selected and enforced by the architecture design and then used as guiding principles for developers.
To conclude this preliminary review, we would like to point out that a major challenge affecting GRC software solutions is the overwhelming pace of change.
The regulatory, legal, business, and risk environments are evolving daily. Emerging technologies (NLP, ML, and AI) can revolutionize the organization’s capabilities, making the GRC opportunities practically endless.
Although the existing proposition of GRC software and related services on the market is versatile, it may be confusing to choose the right one.
As an expert in building a trusted software for a variety of industries (fintech solutions, business intelligence, machine learning, and data science), Innovecs can create an innovative GRC solution specifically for your business needs.
Innovecs addresses risk management issues
One client, a SaaS company with a wide range of B2B and B2C financial solutions, came to Innovecs with a live financial risk management system that could process and analyze financial data, but only with human intervention.
The client wanted to improve this system by making it autonomous, more secure, and performance-driven.
The Innovecs’ team transformed the client’s system to a cloud solution with a responsive user interface (can work on both PC and mobile devices).
The system is trained to analyze financial transaction data. It inspects the money sender, checks their payment history, and the origin of the money. Based on this information, it determines possible risks.
Now, the Innovecs’ team is continuing to maintain the client’s tech system, providing it with the best code quality and system performance.