Many organizations struggle with managing risk effectively due to siloed approaches. Each department – from information security to compliance – has its own set of risks that they manage independently. While each team may have their own process and system for managing risk, there is often little coordination or sharing of information between teams. As a result, risks are not managed in a holistic or strategic manner.
Fortunately, there is a way to achieve an integrated approach to risk management. By using the Governance, Risk, and Compliance (GRC) framework, organizations can break down silos and get a holistic view of all risks across the enterprise. Furthermore, by implementing an Environmental, Social, and Governance (ESG) program within the GRC framework, organizations can take a proactive approach to managing risks in order to create long-term value.
What is GRC?
Governance, risk management, and compliance (GRC) is an integrated approach to managing an organization’s overall governance, enterprise risk management, and compliance functions. The goal of GRC is to improve decision making by providing visibility into an organization’s risks and opportunities. In order to do this, GRC relies on four key principles:
- Integration: All stakeholders must be involved in the risk management process in order to make decisions that are in the best interest of the organization as a whole. Furthermore, data must be shared across departments in order to create a comprehensive view of all risks.
- Automation: In order for the integration principle to be successful, automation is necessary. By automating the risk management process, data can be easily shared between departments and stakeholders can be kept up-to-date on changes in risks.
- Visibility: In order for stakeholders to make informed decisions, they need visibility into all aspects of the organization’s risks. This includes understanding where risks come from, how they are being managed, and what the impacts could be if these risks are not mitigated properly.
- Collaboration: Effective risk management requires collaboration between all stakeholders. By working together, stakeholders can identify shared objectives and create strategies for mitigating risks that are aligned with these objectives.
What is ESG?
Environmental, social, and governance (ESG) refers to the three pillars that make up an organization’s long-term sustainability strategy. The goal of ESG is to create value by taking into account environmental, social, and governance factors when making decision about investments or other business activities.
The three pillars of ESG are as follows:
- Environmental: This pillar focuses on minimizing an organization’s negative impact on the environment. This includes reducing greenhouse gas emissions, conserving water resources, and minimizing waste.
- Social: This pillar focuses on maximizing an organization’s positive impact on society. This includes creating jobs, improving access to education and healthcare, and promoting diversity and inclusion.
- Governance: This pillar focuses on maximizing an organization’s positive impact on shareholders and other stakeholders. This includes ensuring ethical behavior by leadership and promoting transparency around business practices.
In order for organizations to effectively manage risk across the enterprise, they need to take an integrated approach using the Governance, Risk & Compliance (GRC) framework. GRC provides organizations with a holistic view of all risks while also breaking down silos between departments. Furthermore, by implementing an Environmental Social & Governance (ESG) program within the GRC framework, organizations can take a proactive approach towards managing risks which will create long-term value for shareholders & other stakeholders.
Interested in creating and managing an ESG programme of your own? Learn more about Empowered’s ESG programs by clicking here.