Mastering GRC Roles and Responsibilities for Compliance Organizational Excellence

GRC Professionals are tasked with both protecting and producing value for their organizations. 

I like to think of them as mountain climbers. As they climb to the summit (creating business value), they constantly look for pitfalls and setbacks (preserving value). 

Each peak on this rocky trek reflects an essential part of governance, risk management, and compliance. Navigating the valleys, sharp turns, and cliffs between these peaks requires acute awareness and strategic planning.

You’ll find GRC professionals across various departments, from risk management to finance to human resources. What unites them is their dedication to principled performance—achieving goals while staying true to ethical standards.

In essence, GRC professionals are the backbone of the organization. They ensure that companies succeed and do so with integrity.

Why Does Your Organization Require GRC?

Organizations face a continuously changing environment. Whether you’re part of a huge firm, government agency, small business, or nonprofit, you’ll likely confront the following challenges:

• Constant changes in regulations
• Increasing consumer awareness and stakeholder demands
• Increasing costs of meeting regulatory requirements and mitigating risk
• Increase in third-party interactions and accompanying governance challenges
• Legal and financial ramifications of dysfunctional governance, risk, and compliance management

Advantages of Well-planned GRC Management

Organizations that adopt a cohesive, integrated set of GRC roles, responsibilities, and technologies should expect the following benefits:

• Reduced expenses
• Reduced duplication of processes
• Faster and easier access to information
• Improved communication 
• Increased ability to regularly perform essential processes

Components of a Robust GRC Strategy

A robust GRC strategy often consists of the following components, including an overarching GRC framework template:

• Effective oversight
• Integrated reporting and analytics
• Organizational-wide ethics and integrity requirements
• Integrated risk and control guidelines
• Unified vocabulary within departments 
• Standardized procedures for fundamental processes such as hiring, training, investment, and evaluation

Too often, firms feel that purchasing a single GRC platform or establishing a specialist department will solve all their GRC challenges. But it doesn’t work that way. A strong GRC strategy is more than just a tool or a set of roles. 

Case in Point: The Wells Fargo Scandal

A great example of the consequences of overlooking robust GRC functions is the Wells Fargo scandal. In the early 2000s, the bank’s aggressive sales culture prioritized short-term gains over ethical behavior. As a result, employees were pressured into fraudulently opening millions of bank and credit card accounts. 

The Department of Justice reported that Wells Fargo & Company and its subsidiary, Wells Fargo Bank, N.A., agreed to pay $3 billion to resolve their criminal and civil liability for pressuring employees to meet unrealistic sales goals between 2002 and 2016.

Wells Fargo admitted improperly collecting millions of dollars in fees and interest, harmed customers’ credit ratings, and unlawfully misused sensitive personal information.

This instance shows a complete failure of Bank leadership at numerous levels. “Wells Fargo traded its reputation for short-term profits and harmed untold numbers of customers,” said Central District of California U.S. Attorney Nick Hanna. 

Wells Fargo declared in its 2012 Vision and Values: “We start with what the customer needs – not with what we want to sell them.”

In contrast to Wells Fargo’s public statements and disclosures about needs-based selling, the Community Bank’s volume-based sales model demanded that employees sell large volumes of products to existing customers without considering customer needs or use. 

Lessons Learned: Organizations prioritizing robust GRC frameworks can navigate complex challenges with integrity and foresight. By recognizing and addressing risks before they escalate, they fortify their foundations against the corrosive effects of ethical compromise, ensuring sustainable success.

Corporations today face pressure from authorities, shareholders, and the general public to preserve ethical standards. This pressure emphasizes the importance of GRC.

Clarifying Roles and Responsibilities Across the Corporate Gamut

From governance and oversight to compliance and ethics,  the collective efforts of GRC teams form the backbone of organizational excellence and principled performance. 

Governance & Oversight

Roles: Board of Directors, Governance Committees, Executive Leadership

Contribution to GRC: Setting direction, establishing accountability, decision-making authority, and ensuring alignment with mission.

Impact on Organizational Excellence: Clear governance and oversight structures foster transparency, accountability, and ethical conduct, laying the foundation for principled performance.

Strategy & Performance

Roles: Executive Suite, C-suite, Strategy Teams

Contribution to GRC: Setting objectives, aligning strategies and tactics, monitoring key performance indicators (KPIs), and ensuring adherence to ethical standards.

Impact on Organizational Excellence: Effective strategy and performance management enable organizations to achieve objectives, navigate uncertainty, and maintain integrity.

Risk & Decision Support

Roles: Risk Management Teams

Contribution to GRC: Identifying, assessing, and managing risks, providing data-driven insights to support effective decision-making, and mitigating potential risks to organizational objectives.

Impact on Organizational Excellence: Robust risk management processes empower organizations to anticipate and respond proactively, minimizing disruptions and maximizing opportunities for success.

Compliance & Ethics

Roles: Compliance Officers, Ethics Officers, Legal Teams

Contribution to GRC: Ensuring adherence to regulatory requirements, industry standards, and ethical principles, promoting a culture of integrity.

Impact on Organizational Excellence: Comprehensive compliance and ethics programs mitigate legal and reputational risks, instill stakeholder trust and enhance the organization’s reputation.

Security & Continuity

Roles: IT Security Teams, Business Continuity Planners, Crisis Management Teams

Contribution to GRC: Protecting physical and digital assets, mitigating cybersecurity threats, and ensuring business continuity through robust contingency planning and response measures.

Impact on Organizational Excellence: Proactive security and continuity measures bolster organizational resilience, safeguarding critical resources and operations against disruptions and enhancing overall operational efficiency.

Audit & Assurance

Roles: Internal Auditors, External Auditors, Quality Assurance Teams

Contribution to GRC: Providing independent assurance on the effectiveness of internal controls, compliance with policies and regulations, and the reliability of financial reporting.

Impact on Organizational Excellence: Rigorous audit and assurance processes enhance transparency, accountability, and stakeholder trust, validating the organization’s commitment to excellence and compliance.

AI For GRC: Building Efficiencies And Empowering Team Players

Any discussion about GRC roles in 2024 would be incomplete without mentioning AI’s role.

As technology continues to evolve, the role of Artificial Intelligence (AI) in unifying organizational risk and compliance management becomes increasingly apparent. While AI has made significant strides in many industries, its integration into GRC has been cautious due to concerns such as job displacement, decision-making transparency, and security vulnerabilities. 

Additionally, questions surrounding data quality and the potential perpetuation of biases raise legitimate concerns regarding fair AI-based risk assessments.

Let’s discuss some of the “hats” AI will likely wear in the risk and compliance sector.

Advanced Actuary

One of the most notable advancements brought about by AI is its ability to enhance data analysis. AI-powered solutions excel at sifting through vast datasets and identifying patterns, trends, and anomalies. Going forward, compliance officers will be equipped with deeper insights into potential risks.

Law Interpreter

AI streamlines the interpretation of regulatory texts through Natural Language Processing (NLP). AI systems alleviate the manual effort previously required to decipher and codify regulatory texts. This efficiency accelerates the compliance review process without compromising accuracy.

Fortune Teller

AI aggregates data from various sources to identify patterns and correlations, and it can predict future outcomes based on historical data with uncanny accuracy. 

Law Enforcer

AI also bolsters real-time monitoring and decision support, enabling organizations to detect potential compliance risks in real-time and respond promptly. AI-powered solutions automate risk scoring and transaction monitoring tasks. 

A+ Student

AI systems are ongoing learners. They improve their predictive accuracy over time. This iterative learning process ensures compliance strategies evolve in line with changing conditions.

Proactive and Continuous Compliance

Traditionally, compliance management was focused on defense. However, risks and cyber threats are inevitable in today’s interconnected and digital business landscape. As a result, organizations must adopt a proactive approach that prioritizes preparedness and continuous monitoring.

To adapt, organizations should prioritize creating a resilience strategy, defining risk tolerance thresholds, and leveraging technology to establish a unified perspective on risk and compliance. Organizations can connect their GRC workflows with broader business practices by integrating compliance management with other enterprise systems.

Focus On The Frontline

While board and executive-level top-down governance faces ever-growing scrutiny, attention is also shifting toward how that governance trickles down to organizational frontlines. Internal personnel play a pivotal role in protecting against cyber threats. 

GRC begins with G. Given its function in corporate governance, it is sometimes viewed as a board-driven strategy. But in reality, risk management and compliance professionals are the real mountain climbers.

Engaging and equipping the frontline is essential for building connected GRC and compliance strategies within organizations and will be a focal point for leaders in the year ahead.