Why Your Company Needs A GRC Team?
Governance, risk management and compliance (GRC) are three concepts that keep businesses stable and out of trouble. Each idea is related to the other, and a successful business needs to follow all three to remain successful.
Why a Company Needs A GRC Team?
Learn more about the GRC system and why hiring experts to maintain it is recommended.
Governance is the act of governing a company or organization through rules and regulations. In a country, a government is needed to manage the trade of goods, maintain public safety, protect citizens’ rights, etc. In every business, governance is needed to ensure that good, sound decisions are made in the best interests of an employer and employees. (contd.: Why a Company Needs A GRC Team?)
A governance system consists of a hierarchy with senior leaders on top and entry-level workers on the bottom. Every person at every level has a list of duties to perform. A GRC team ensures that everyone is following the rules of his or her position and working for the good of the company.
Risk management involves identifying, reducing and preventing the risks of doing business. When many people go into business, they don’t understand the full risks if something goes wrong, so they increase their chances of being unsuccessful.
Risk managers create detailed outlines of problems that could occur at every level of business. An example is increasing the budget for one department, such as accounting, as it decreases funds for the other departments like marketing or construction.
Compliance means remaining within the limits that are set by the law. Every company and organization that serves the public is required to be legally compliant. This means following the laws that pertain to their business. The first step is to obtain a license to operate a business in a certain location. For the license to remain valid, a professional has to participate in continuing education.
Without proper governance, a company’s hierarchy will break down as employees stop following basic rules and standards. If risk are not managed properly, employees will act recklessly and reduce safety to the public. Clients will react by complaining to the general public and to consumer protection agencies. (contd.: Why a Company Needs A GRC Team?)
If your company is not legally compliant, you face all kinds of legal problems. These include:
- Loss of license or right to operate
- Lawsuits from customers or organizations
- Criminal cases and/or imprisonment
The business consequences are a loss of profits that also causes a loss of investment funds to build up the company. Your employees are not paid and will quit or file their own lawsuits. If the customers are not satisfied, they’ll complain to the media and consumer protection agencies, which results is a loss of profits and reputation.
Every business needs to follow the law and maintain high stands of quality. Some companies have their own GRC department, while others hire a third party from the outside.
There is also software that professionals use to keep track of governance, risk management and compliance needs. The most effective option is to hire a team of professionals who understands business and will work to improve yours.