By Aclaimant

Dec 07, 2021

In our previous post, we dove into the key differences between enterprise risk management (ERM) and integrated risk management (IRM). Now, we’re adding another risk and compliance management approach to the mix.

Governance, risk, and compliance (GRC) is a set of processes that helps organizations achieve business objectives, remain compliant, and address potential threats. While each risk management approach has its benefits, understanding their differences is critical in choosing the right framework for your organization.

What is GRC?

Before you can determine which risk management approach is the most effective for your organization, a comprehensive understanding of GRC is essential. The main focus of GRC is to ensure alignment between organizational activities, business objectives (e.g., implementing new technology), and regulatory requirements. 

The three components of GRC:

  • Governance includes processes that help align the organization’s business practices (e.g., new hire training) and goals. Successful governance can help business leaders determine which actions are helping a company drive organizational success, rather than hindering progress.

  • Risk involves identifying, evaluating, and mitigating threats to the organization. This can be anything from cyber risk to legal repercussions. Risk assessments and internal audits are two of the main processes that help organizations manage risk with GRC.

  • Compliance management involves ensuring alignment between organizations’ activities and laws and regulations that could impact them. 

Organizations that take this approach to risk management typically implement GRC software. This helps streamline processes and audits, resulting in reduced costs and more efficient operations. But when the three pillars of GRC are siloed, it can lead to operational inefficiency and redundant risk management measures.

GRC vs. IRM vs. ERM: Which approach is right for your organization?

Each of the three risk management approaches can help organizations identify and mitigate operational risks — so how do you determine which one is right for you? You should first consider the size of your organization.

Implementing an ERM or GRC framework can be resource-intensive, which is not ideal for a small or medium-sized business. You should also consider your priorities and desired business outcomes. An IRM program can be a more cost-effective approach that provides a similar outcome on a smaller scale.

IRM solutions like a risk management platform enable you to report incidents in real-time and use analytics features on a single dashboard. These capabilities help increase visibility and collaborate across departments for more effective risk management.

If you are considering transitioning away from a GRC solution to benefit business continuity, you’re certainly not alone. GRC tools are often audit-oriented and can be limited in scope compared to other technologies. As regulatory compliance becomes a ubiquitous conversation, many businesses are moving away from GRC in favor of a more flexible, agile solution. In fact, Gartner said it is shifting from GRC to IRM because traditional GRC technology solutions don’t provide actionable insights.

There's no one-size-fits-all risk management approach

The digital transformation of businesses is occurring quickly — which also means there’s a heightened risk landscape. And there’s not a one-size-fits-all solution to risk management, which is why it’s important to understand the key differences between the three approaches.

Learn more about Aclaimant’s insight-driven workflow solutions.

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