Efficiently managing risk and compliance is no longer a luxury. In today’s era, it has become a business necessity and has gone beyond a regulatory obligation. A governance, risk, and compliance (GRC) framework offers businesses a systematic and streamlined way to combine decision-making, risk management, and compliance efforts under one roof.
If they fail to follow an impactful GRC strategy, businesses experience siloed risk management, ineffective compliance processes, and limited visibility across risk areas.
It is not just about keeping up with evolving regulations, but about ensuring that risk and compliance management becomes a seamless part of operations.
This guide explains the term “What is GRC” in detail. It also explains the correlation between GRC and ERM (Enterprise Risk Management).
What is GRC (Governance, Risk, and Compliance)?
GRC denotes Governance, Risk, and Compliance and originated with the Open Compliance and Ethics Group (OCEG) in 2002.
In simple terms, GRC is an integrated collection of capabilities that empowers an organization, company, or business to achieve Principled Performance – the ability to reliably attain objectives, address doubt or ambiguity, and act with integrity.
GRC (Governance, Risk, and Compliance) and OCEG (Open Compliance and Ethics Group)
GRC refers to governance, risk, and compliance; however, the complete story of GRC goes beyond those three words.
OCEG created the acronym (originally called the “Open Compliance and Ethics Group”) as shorthand for the critical capabilities that must collaborate to produce results and obtain Principled Performance. These capabilities effectively combine governance, management, and assurance for performance, risk, and compliance activities.
It comprises work done by departments in audit, security, governance, strategy, risk, compliance, finance, legal, IT, and HR. Moreover, it includes operators across lines of business, the executive suite, and the board itself.
While OCEG used the acronym as early as 2002, the OCEG founder, Scott Mitchell, published the first peer-reviewed academic paper in the International Journal of Disclosure and Governance.
This paper affected the related software and services industry. Thus, work began on open-source GRC standards.
Why Do Organizations Need GRC?
According to OCEG, developing strong GRC capabilities can help organizations prosper in today’s challenging and complex business environment. Hence, businesses today must consider various factors:
- Stakeholders rely on strong business results and expect organizations to operate with high levels of transparency.
- The regulatory environment is volatile and uncertain.
- The exponential growth of third-party relationships has made risk a big management challenge. Not only do third parties present a risk if they do not deliver their service or product in a timely fashion, but your organization can be exposed to and held liable for ethical/compliance lapses of third parties.
- The costs of addressing risks and regulatory requirements are spiraling out of control.
- There are harsh consequences when threats and opportunities aren’t identified.
Overall, the OCEG emphasizes the importance of shared responsibility and integration in GRC activities. Businesses should remember that the GRC framework doesn’t only help meet regulatory obligations. It is a structured approach that helps them align IT with their goals. It also helps manage risks and comply with all industry and government regulations.
How to Implement a GRC Framework
Various crucial steps for your organization to apply a robust GRC framework are straightforward to summarise:
Assess current GRC practices by analyzing risk management, governance policies, and compliance controls to identify gaps and inefficiencies.
Describe and follow clear GRC objectives by aligning GRC goals with business strategy and regulatory obligations, and ensure leadership commitment to risk oversight.
Develop governance structures that help establish clear roles and responsibilities, and implement regular reporting processes for governance and compliance.
Combine technology with GRC to enable companies to implement GRC software that automates compliance, conducts risk assessments, and tracks regulatory requirements.
Monitor and enhance the GRC framework by conducting timely audits, risk reviews, and policy updates to ensure it remains relevant and effective.
Technology’s Essential Role in GRC
As regulatory complexity increases over time, manual compliance processes are not effective. GRC technology provides:
Real-time compliance monitoring lessens manual effort and enhances accuracy.
Centralized risk dashboards offer comprehensive visibility of governance, risk, and compliance activities.
Automated risk assessments help improve cybersecurity, reduce operational risk, and improve regulatory oversight.
Cybersecurity is an important part of governance and compliance. Key cybersecurity frameworks included in GRC programs are:
ISO 27001 – information security management standard
The NIST Cybersecurity Framework works as a guideline for cyber risk management and incident response.
PCI DSS – Compliance framework for financial data security
If they adopt technology-driven GRC solutions, organizations can streamline and revolutionize compliance, strengthen governance, and effectively reduce regulatory risks.
GRC Versus ERM: Same Principles, Different Words
GRC and ERM follow the same core risk management principles. However, they are often framed differently based on the industry and regulatory environment.
ERM (enterprise-wide risk management) helps align all risk types, including financial, operational, cyber, and compliance, under one roof.
GRC provides the structure for applying ERM principles and ensures that risk and compliance processes are appropriately governed.
A GRC program supports the goals of ERM: risks are recognized, examined, and managed within a governance framework. In short, GRC and enterprise risk management (ERM) are two sides of the same coin: both frameworks aim to break down silos and manage risk holistically.
GRC Use Cases
A GRC framework helps companies establish policies and practices to reduce compliance risk. IT and security GRC solutions focus on leveraging timely information about data, infrastructure, and virtual, mobile, and cloud applications.
Similarly, a company’s GRC system should enhance efficiency, reduce risk, and increase performance and return on investment (ROI). Moreover, businesses will create and benefit from a GRC framework for leadership, the organization, and the operations of their IT areas, ensuring alignment with the organization’s strategic objectives.
These areas encompass the correlation of information across business processes, policies, and controls, as well as activities IT, finance, HR, and C-suite executives perform.
Efficiency
As you may be aware, risk assessment, data compliance, internal audits, and other GRC-focused tasks are time-consuming when companies don’t benefit from GRC software. In reality, GRC allows organizations to reduce silos in processes and data.
Likewise, it helps reduce manual effort and comply with regulations. Above all, companies can assess and predict cyber risk incidents.
A GRC capability comes in handy when firms want to handle the lifecycle of AI- and financial-driven models and enhance IT compliance and controls.
Furthermore, it helps organizations examine the effects of regulatory and business requirements on policy frameworks and assist IT controls and automated measurements with integrated third-party products.
Risk Assessment and Reduction
What makes GRC effective is its capability to conduct impactful risk assessments and to establish, automate, and manage risk reduction. Therefore, organizations need to make full use of this benefit, as GRC data enables them to make informed decisions.
Similarly, they can assign resources to appropriately lessen risks. Enterprise risk management (ERM) prioritizes risk factors as the subcategory of GRC.
Simply put, an excellent GRC program is beneficial for firms that have gone through a compliance or risk incident or failure.
Businesses that haven’t achieved success in their visibility, external and internal financial risk reporting, or third-party risk management should consider adopting a GRC model.
Doing so will help them recognize and assess imperfect frameworks and redundant control sets, bypassing recurring risk issues.
Wrapping Up
We expect you to appreciate our guide explaining “What is GRC”. Without an effective GRC model, companies can find themselves in a precarious situation by facing regulatory penalties, inefficiencies, and reputational damage.
Thus, organizations and firms should adopt the right approaches and processes to transform GRC from a compliance necessity into a competitive advantage.
FAQs
Can SAP be considered a GRC tool?
SAP Access Control is an application available within the SAP GRC suite of solutions.
Does Microsoft have a GRC tool?
Compliance helps companies meet the mandated boundaries (laws and regulations) and voluntary boundaries (the company’s policies, procedures, etc.). Microsoft’s GRC 365 solution supports the core definition above and is included in Dynamics 365 Finance and Operations as its key part.
Is Salesforce a GRC tool?
Salesforce primarily works as a powerful CRM tool; it can’t be assumed to be a GRC tool. It doesn’t have the best approach for GRC. To execute an efficient GRC function, you rely on the right software to do the job.
Which companies are the top GRC software providers?
The top GRC software providers are MetricStream, OnTrust, Hyperproof, Lema AI, and more.
What are the best GRC tools in 2026?
Various GRC tools in 2026 include Sprinto, which suits autonomous trust and hands-free compliance. Drata is suitable for continuous control monitoring. Additionally, Vanta suits fast self-serve compliance for startups. Lastly, Secureframe is suitable for guided compliance with policy management.
