What is GRC? A simple breakdown of Governance, Risk, and Compliance

GRC stands for Governance, Risk, and Compliance. It’s a framework that helps organisations manage their operations effectively while staying on top of risks and meeting legal requirements. 

The concept GRC was first introduced in 2007 by OCEG as a way to integrate the various sub-disciplines of governance, strategy, risk, audit, compliance, ethics/culture, and IT into a unified approach.

“Using a GRC approach means businesses are leveraging the best strengths and techniques from all of the critical disciplines,” it states in their book about the framework. Here people working with GRC are described as ‘GRC protectors’ given their important role in protecting the business.

Here’s a quick breakdown of what each term means:

Governance: Steering the organisation

Governance is about setting the direction and making sure everyone in the organisation follows the same strategy. It involves leadership decisions, creating policies, and ensuring accountability. Good governance aligns actions with goals and sets the ethical standards for how the company operates.

Risk: Managing uncertainty

Risk refers to the potential threats that could disrupt an organisation’s ability to achieve its objectives. Risk management means identifying, assessing, and reducing risks—whether they come from financial instability, cybersecurity threats, or operational issues. It’s about preparing for the unexpected and minimising harm.

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Also read: What is GRC software and what makes it powerful

Compliance: Following the rules

Compliance ensures the organisation meets all relevant laws, regulations, and internal policies. This includes everything from data protection rules (like GDPR) to industry standards. Staying compliant protects the business from legal trouble and financial penalties.

Why GRC matters

When Governance, Risk, and Compliance are integrated, the organisation becomes more efficient, reduces the risk of problems, and stays aligned with both its goals and legal requirements. A robust GRC strategy is essential for cultivating a sustainable and well-managed organisation. It prepares businesses to navigate a future marked by diminishing consumer and stakeholder trust, increasing cyber threats, and a growing web of regulations.

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