The GRC Pundit

GRC is “a capability to reliably achieve objectives while addressing uncertainty and acting with integrity."  The reliable achievement of objectives is the governance piece, addressing uncertainty is about risk management, and acting with integrity is the compliance angle.  All three of these provide a natural flow.  Governance provides direction and objectives giving the context for risk management.  Risk management in turn aims to comprehend uncertainty and set boundaries which then relies on compliance to ensure that we stay within those boundaries.

Organizations have been doing GRC since the dawn of business.  We did not need a three-letter acronym to all of a sudden do GRC.  Every organization has some approach to the aspects of governance, risk management, and compliance: from the ad hoc and disorganized to the mature and aligned.  GRC is part of business whether you call it GRC, something else like ERM, or you have no name for it at all.  The question to consider is how mature is your organization’s GRC practices.

GRC is more than technology. You cannot go out and buy “GRC” – sure, you can buy GRC technologies that enable, improve, and mature GRC related processes.  GRC, properly understood, is something the organization does and not buys.  The right solutions, and in this context GRC solutions, can enable and mature your organizations GRC processes.  But technology by itself does not give you GRC.

That being said – we do have a GRC market for technology, professional services, and content.  I know – I was the first to define, model, and label it GRC back in February 2002 “while at Forrester Research.  I have been working on refining and modeling the market in the eleven years since.  As with any market, they evolve shift and mature.  The GRC market certainly has shifted and changed.  This is what I refer to as: GRC 3.0 – Rethinking GRC.

Let’s explore the stages of the GRC market since it’s first definition and inception in February 2002 to the present day.  It all started . . .

• GRC 0.9, before 2002: Yes, we had GRC before we had GRC.  GRC is part of business and we have always used technology to manage it.  At one point pen and paper were high-tech.  Organizations have been doing GRC and using tools to manage it for as long as we have had business.  Similar to other technologies like Client Relationship Management – we did not need CRM systems to all of a sudden begin managing client relationships.  CRM came into the world to improve and mature how we manage client relationships.
• GRC 1.0, 2002 to 2007: On a cold snowy day in February 2002, in the offices of GiGa Information Group in Chicago soon to be acquired by Forrester Research I sat through two vendor briefings that struck me with a revelation.  The first was a technology vendor briefing demonstrating their solution to manage and integrate policies, controls, and risks.  This really struck me.  It was something I had envisioned in the 1990’s as a consultant but was not a software developer so never took action on.  It was simply brilliant.  What do we call it?  A few hours later I had another briefing with PwC reviewing their services.  My ADD mind was bouncing around back to this previous briefing while coming back the PwC briefing – sort of a mental Ping-Pong.  The PwC briefing had some terms that seem to drift toward me from the slides.  On different slides my mind locked onto the terms Governance, Risk Management, and Compliance.  There it was – a name for this new market – GRC.  Providence would have it that the timing for this market was spot on as Enron and Worldcom hit us hard and we had resulting legislation such as SOX.  GRC 1.0 was largely focused on addressing the challenge of internal controls over financial reporting, SOX compliance, as well as related IT controls.
• GRC 2.0, 2007 to 2012:  Over five years the GRC market grew and expanded.  It was growing in dimensions.  My second Forrester GRC Wave, published in December 2007 right as I left Forrester to become a boutique analyst/researcher, understood this.  It had four separate Wave graphics representing the solutions in different ways as different parts of the organization have different needs as well as some core common needs for GRC.  During the period of 2007 to 2012 we saw GRC expand and take on areas of audit management, enterprise and operational risk management, broader understanding of compliance beyond financial controls, and more.  I began referring to the market as the GRC EcoSystem as it had many components.  I worked with OCEG on defining the GRC Solutions Guide 2.0 and 2.1, which defines 28 categories of GRC technology.  GRC during this period was very focused on the back-office functions of GRC.  There are hundreds of vendors/solutions in its various sectors/categories. At the same time the major analyst firms continued to focus on GRC in their static, two-dimensional, vendor comparisons limited to about fifteen vendors – completely misrepresenting the market and leaving many worthy companies out.  As more solutions focused on this area – the bar gets raised by the analyst firms.  To be recognized you have to have so much revenue, offices in multiple countries, and more.  They expanded what they evaluated slowly but did not give more time to analyze.  In one major firm you now have a multi-billion market based on analyst research that allows a ninety minute demo covering nine very complex areas of GRC – and organizations are basing significant investment decisions on this report.  The GRC market has expanded but the major analyst firms have not kept up.
• GRC 3.0, 2013 into the future:  We now enter the era of GRC 3.0 – what I label Rethinking GRC.  Later this month I will be releasing the new GRC market model.  This is a representation of the market that understands the building blocks of GRC – functional areas of GRC solutions/technology.  How these come together into platforms that serve the needs of various GRC related departments in the organization (e.g., risk management, compliance, legal, finance, audit, security, health and safety, and more), and how they can come together into an enterprise GRC initiative.  There are industry specific views into the model, as well as issue specific views (e.g., anti-bribery/corruption, AML, conflict minerals, privacy, and more).  GRC 3.0 is also about significant changes to use of GRC solutions within organizations.  One is GRC architecture – it is not about one GRC solution to replace them all.  That can be a strategy, but organizations have different solutions serving different needs – how do we get it to work together.  It is about operationalizing GRC – brining GRC further into the business fabric/operations.  It is about brining GRC to the ‘coal-face’ where we focus on engaging employees in GRC and providing solutions that are simple, mobile, and easy to use for GRC happening at the front-lines/office of the business.

GRC is more than technology – but it is technology that matures GRC practices and processes to be more efficient, effective, and agile in a dynamic and distributed business environment.  The GRC market is a macro-market and not a micro-market. It is a market with many sectors that serve components of GRC scattered throughout the organization.  Some of these functions come together to serve an enterprise approach to GRC to drive consistency where there are similar needs across GRC areas of the business.

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I wrap up my market definitions and models for GRC 3.0, I would love to hear you opinions, experiences, and thoughts.  Please feel free to comment below.