In a rapidly evolving regulatory landscape that's tightly coupled with the ongoing COVID-19 crisis, GRC transformation has become extremely crucial to both short term and long term success of an organization. Enterprises must adapt to the emerging
trends on the horizon, maximizing efficiency, and optimizing costs across the GRC value chain. In this blog, we discuss how automation could transform GRC processes by drastically reducing the cycle times of test runs.
As the global business landscape evolves, and operations adapt, it's critical to overhauling your GRC environment in tandem. But
recent reports suggest that over half of senior-level executives perceive risk and compliance as a top challenge for the next few years. Further,
69% agree that their existing policies and practices aren't geared to meet future needs – especially as organizations' regulatory burden increases across the 2020s. This is why it is so important to embrace GRC automation as a business staple,
bringing much-needed efficiency into governance, risk, and compliance-related activities.
Critical Trends on the Horizon
Several global trends make GRC a vital area for transformation
- Easing out of regulatory pressures: Regulators are easing out reporting pressures amidst the COVID-19 crisis to drive adaptability, foster survival in current ambiguous market conditions.
- Increase in vendor and third-party risk exposures: Several firms are facing tremendous pressures in the COVID-19 phase due to their exposures to vendor-related risks, including cybersecurity, business continuity, and enterprise audit-related
- Rapid growth often leads to data generation and hosting in silos, where each business unit follows a disparate set of GRC practices. There could be a lack of centralized visibility, compounding the risks arising from regulatory oversight.
GRC control testing must become more agile – backed by the centralization of data – to keep up.
As the pace of business transformation picks up, we could expect GRC thresholds to be even more critical to enterprise operations. But teams are often not working at scale with this demand. With the rise of lean staffing, a select group of experts is allocated
to perform a variety of tasks – and testing GRC controls take up a lot of these precious working hours.
The Cost of Legacy Processes across the GRC Value Chain
Traditionally, GRC was managed as a set of interrelated but disparate processes. There were teams dedicated to conducting audits, managing internal policies, looking after compliance, detecting risk & resolving incidents, and ensuring information security.
For all of these processes, the same data would be replicated without a single pane of truth, leading to time and effort duplication.
This cost of effort-intensive GRC is three-fold:
- High-value personnel is relegated to doing low-value tasks (like checking if an established control works for different scenarios or compiling tedious documentation).
- This trend could bring down the morale and motivation levels of the IT team, impacting its efficiency.
- As audit requirements get extensive, the time and cost required will shoot up.
As an organization scales and becomes progressively more mature, its GRC burden across vendor management, business continuity, and policy/documentation management also multiply – adding to your costs.
Ultimately, this distracts from larger, more value-adding initiatives like providing support for new business models or exploring new geographies for outreach. To shift themselves from this myopic way of doing things is why companies are now turning to sophisticated
GRC tools that could alleviate the human burden, with zero compromises on compliance.
The Need for GRC Automation and More Efficient Control Testing
Automation tools could ensure that the entire GRC value chain – from risk assessment and management to security policy and control management, and ultimately regular monitoring/analysis – becomes less effort-intensive and more accurate.
Let’s take a simple scenario where a control ensures that order processing happens only within a customer’s credit limit. Authorized stakeholders can override this control for exceptions. A quarterly/annual audit would detail every case of overriding, who
applied the override, and what was the customer’s credit limit at that time. An internal audit team would have to go through the entire report manually, testing if the control was in place for every situation, manually recording every instance of failure so
that proper disclosures and remediation could be triggered. If you were to multiply this by the average number of controls a company has, and we have an incredibly effort-intensive exercise at hand.
A study revealed that most organizations are now quickly adopting GRC tools to keep up with the volatile and ambiguous environment. And the
18% who haven’t adopted these tools plan on doing so very soon. Automation across the GRC value chain – particularly in an area as effort-intensive as control testing – will be essential. More than one out of three companies have adopted control
automation; 81% have a clearly defined internal control framework. This move is critical given that the average company has a vast number of controls identified in its framework – which means that the manual effort needed for each control
will be enormous.
Automation could minimize the massive volume of these iterative tests, configure for one control, and auto-schedule reports at regular intervals. The solution would include a library of reusable tests so that no custom coding is required. Automation would
cover common GRC control scenarios, like procure to pay, inventory management, capital asset management, and other core workflows.
Realizing Tangible Outcomes from Automated Control Testing
Control testing is at the heart of the GRC value chain, ensuring that policies stand up to every possible scenario. By automating this critical step, organizations can:
- Speed-up time to market by as high as 45%
Boost business readiness for new locations by achieving requisite compliance
- Automate as much as 70% of the business process workflow
Ensure that the necessary GRC checks and balances cover every business scenario.
- Save efforts up to 25%
Dramatically reduce manual testing efforts, routing these resources to more value-adding areas.
GRC initiatives and programs provide the launchpad for companies to take business risks in pursuit of market leadership and innovative products. It’s essential to focus on a quicker time to market, improved business processes, and reduced
costs to drive the long-term efficacy of such programs. And automation is crucial to achieving these objectives.