A Complete Guide to Mitigating Business Risks Through GRC Risk Assessments

Importance and Benefits

Numerous threats plague organizational GRC efforts across industries, especially in recent years as the GRC platform market size continues to grow. In today’s digital age, internal (e.g., outdated software, mishandling of sensitive information) and external (e.g., cyberattacks, natural disasters, socio-political issues) factors can negatively impact the company’s operations and prospects.

GRC risk assessments enhance the company’s risk visibility, helping compliance and legal teams make better decisions about implementing new controls and mitigation strategies. It also increases cost savings through appropriate resource allocation. Most importantly, it builds a risk-aware culture, where employees at all levels are accountable for their responsibilities and actions. Assessing GRC risks, particularly those in highly regulated sectors, is one of the most effective ways to future-proof their operations.

Steps in the GRC Risk Assessment Process

Following a structured process in assessing GRC risks is the most systematic way to determine internal and external threats. Aside from minimizing the possibility of overlooking obscure yet critical risks, this approach delivers objective and reliable results that facilitate data-driven decision-making.

Follow these tried and tested steps:

Step 1: Identify regulatory requirements.

Pinpoint the legal, regulatory, and industry-specific obligations that the organization must follow. Failing to know these requirements results in non-compliance and possible operational disruptions.

Global banks understand that financial regulations change constantly. To ensure continuous compliance with international and specific regional standards, they track policy modifications by reviewing industry publications and government agency websites and consulting with their legal counsel.

Step 2: Assess current controls.

Evaluate existing policies and procedures to determine their effectiveness in addressing new or revised regulatory requirements. Carefully assessing these internal controls helps detect gaps in compliance and operational safeguards, identify areas for improvement, and prioritize resources accordingly. Here are some ways to conduct this:

• Self-assessments through digital questionnaires and checklists
• Internal GRC audits 
• Independent or external audits
• Key GRC risk indicators
• Control testing

Step 3: Conduct extensive risk analysis.

Examine the likelihood and potential consequences of the identified risks using qualitative and quantitative tools. This helps efficiently categorize risks by severity and allocate resources to high-impact ones.

Tech giants utilize advanced analytics and artificial intelligence to predict and evaluate cybersecurity threats, enabling preemptive measures against data breaches and ransomware attacks.

Step 4: Develop mitigation strategies.

Design controls to avoid, reduce, transfer, or accept identified risks. Effective strategies with adequate contingency plans can mitigate operational disruptions. Here are some examples in different sectors:

• Risk avoidance in tech and IT – Zero-day exploits (cyberattack vectors) can be addressed by isolating new software or updates in controlled environments before full deployment.
• Risk reduction in healthcare – Medical errors should be handled through strict double-checking protocols, especially in critical procedures.
• Risk transfer in financial institutions – Defaults on loans can be solved by purchasing credit insurance policies and transferring the risk onto third parties.
• Risk acceptance in different sectors – Brief service interruptions due to minor IT outages may be downplayed by data backups.

Step 5: Monitor the progress and review the results.

Ensure mitigation measures remain effective in the long run, allowing the company to identify and address emerging risks despite the constantly evolving regulations, market conditions, and internal operations.

Global enterprises working with an extensive network of organizations regularly monitor vendor performance with third-party risk management solutions to uphold compliance with legal and ethical standards.

Step 6: Document in detail and communicate judiciously.

Capture risk assessment details, mitigation plans, audit trails, and stakeholder communications by maintaining a comprehensive record of corresponding documents. Digital recordkeeping facilitates quick data retrieval and sharing, particularly with investors, partners, and external regulators.

Overcoming Challenges in the GRC Risk Assessment Process

Many companies still struggle to meet GRC standards and foster a culture of risk awareness even if they follow well-built frameworks, such as the one detailed above. Understanding the different challenges helps relevant personnel deal with them head-on:

• The continuously evolving regulatory landscape makes it difficult for companies to stay compliant. Investing in horizon scanning tools is one of the best ways to get updated.
• Incomplete risk identification, often due to limited stakeholder involvement, leads to potential blind spots. Aside from gaining insights from different departments and organizational levels, leveraging AI-driven analytics can minimize confirmation and anchoring biases.
• Lack of resources, a problem many businesses across industries have, can hinder any GRC efforts. Prioritization in risk identification, analysis, and budget allocation can help companies focus their energy and funds on the most critical risk.
• Lack of accountability and ownership leads to delays and failures. Clearly defining GRC roles and responsibilities and providing targeted training are vital in ensuring that work gets done within budget and the time allotted.
• Manual monitoring and reporting may result in mistakes, reworks, and delays. Automating these tasks is a reliable way to gain insights and generate reports on demand, allowing compliance and risk managers to focus on continuous improvements.