What is GRC?
A business involves many moving parts, especially when it comes to staying organised, avoiding risks and following the rules. That’s where GRC, a framework that helps businesses keep their operations running smoothly and aligned with their goals, comes into play.
In this article, we’ll break down what GRC means, how it works, who’s responsible for it and why it’s such an important part of doing business, especially in an environment where data, systems and opportunities are constantly changing.
What does GRC stand for?
GRC stands for governance, risk management and compliance: three areas that work together to help businesses run ethically, legally and efficiently.
Governance is all about how decisions are made in a business. It refers to the policies, structures and obligations that guide the way the organisation operates. Good governance ensures that the business is aligned with its goals and that everyone knows what’s expected of them.
Risk management refers to identifying and mitigating potential threats, whether they are internal or external to the organisation. This could include cybersecurity threats, financial risks or supply chain disruptions. A strong risk framework helps businesses spot issues early and take steps to mitigate their impact.
Compliance is about following the rules, whether they’re set by governments, industry bodies or the business itself. It means staying on top of legal requirements, internal policies, data privacy laws and ethical standards.
Together, governance sets direction, risk management addresses potential barriers and compliance ensures actions stay within legal and ethical boundaries. When integrated, these elements allow organisations to make informed decisions, adapt to change and grow sustainably while managing risks effectively.
How does GRC work?
Fundamentally, GRC is an integrated approach that helps organisations manage their operations and obligations holistically. Instead of handling governance, risk and compliance as separate tasks in different departments, everything works together in a coordinated system.
Governance involves setting clear policies and guidelines for decision-making, usually led by senior leadership. Tools like enterprise resource planning (ERP) systems help ensure these guidelines are consistently followed across the organisation.
Risk management identifies and addresses potential risks, such as financial, operational or cybersecurity threats. This includes risk assessments, incident reporting and performance tracking. Many companies use digital tools to automate these processes, making it easier to collect data, monitor performance and flag issues early.
Compliance ensures the business is following laws, regulations and internal policies. This involves regular audits, policy reviews and employee training to ensure the company stays within legal and ethical requirements.
To tie everything together, GRC systems use controlling, monitoring and reporting tools to track progress and identify issues in real-time. Control mechanisms in a GRC system help enforce policies and ensure compliance. These include automated alerts to flag risks or upcoming deadlines, access controls to restrict sensitive data to authorised personnel and audit trails that track all actions for transparency.
Monitoring tools play a key role by tracking activities across the organisation in real time, providing valuable data on performance, risks and compliance status. Reporting tools then turn this data into actionable insights, helping decision-makers identify trends and address issues before they escalate.
By working together, governance, risk and compliance help businesses run smoothly and safely, minimising risks and ensuring they follow the rules.
Who is responsible for GRC?
While specific teams take on day-to-day tasks, everyone in the organisation has a role to play in GRC.
Senior leadership and board members are responsible for setting the tone from the top. They define the company’s risk appetite, approve policies and ensure governance practices are embedded into strategy, not just operations.
Compliance officers and risk managers oversee the day-to-day. They design systems, run audits, train staff and ensure that policies aren’t just written, but followed.
HR teams often help with compliance related to employee conduct and safety, while IT teams manage cybersecurity risks and ensure the right technology is in place to support GRC activities.
GRC is a shared responsibility. When everyone understands their role in maintaining governance, managing risks and ensuring compliance, the entire business operates more effectively.
Why is GRC important?
A well-implemented GRC framework provides structure and accountability within a business. It ensures decisions are made with accurate information, risks are identified and managed proactively and legal or ethical issues are avoided.
One key feature of GRC is promoting transparency and accountability. With clear policies and procedures in place, businesses can align actions with ethical standards, fostering trust among employees, customers and stakeholders. This not only strengthens the company’s reputation but also helps reduce the risk of fraud or misconduct.
GRC also enhances decision-making. By providing real-time data on risks and compliance status, business leaders are equipped to make informed decisions that improve operational efficiency. Additionally, GRC helps businesses stay compliant with evolving regulations, reducing the risk of non-compliance and costly penalties.
The consequences of neglecting GRC can be severe. Companies without strong GRC frameworks risk facing legal liabilities, financial penalties and reputational damage. A failure to comply with regulations or manage risks can lead to lawsuits, loss of trust from customers and a tarnished brand image.
What are the benefits of GRC?
When done well, GRC helps organisations operate more effectively, responsibly and confidently. One of the biggest benefits is stronger risk mitigation. By spotting and addressing issues early, businesses can avoid financial losses, reputational damage and regulatory penalties. It also makes compliance more manageable. With clear systems and processes in place, teams can keep up with changing regulations.
GRC also supports better decision-making. When governance structures are clear and risk and compliance insights are built into everyday operations, leaders can make more informed, consistent choices. This creates better alignment across teams and helps everyone stay focused on shared goals.
Most importantly, good GRC builds trust with employees, customers, regulators and investors. A company that operates transparently and ethically is more likely to earn long-term support. GRC isn’t just a risk management tool; it’s a framework that helps businesses grow sustainably and stay resilient in an ever-evolving world.
Workday provides GRC software to help you manage workforce policies, compliance and talent transitions seamlessly.