Can forward-thinking business leaders successfully transition from chaos to calm in the year ahead? In this blog we take a short journey through some of the risks that are likely to impact organisations throughout 2024 and take a tour through 8 GRC trends that will help organisations to manage these risks effectively.
Organisational risk registers seem to get longer every year as new risk types emerge relating to digitisation, information security, environmental & social issues, and the rising costs of raw materials & energy prices. Couple this with the aggressive corporate strategies driven by ambitious leadership teams and the constant evolution of technology and it’s not hard to see why governance risk & compliance – and the GRC tools needed to streamline & automate these processes – are gaining traction and becoming more widely used & relied upon than ever before.
A Grim Risk Prognosis Predicted for 2024
According to ICG, global growth in 2024 is likely to slow in the new year thanks to the impact of higher interest rates and high prices for goods & services. Meanwhile, geopolitical risk is likely to remain uncertain, with the impact of ongoing conflicts in the Middle East and Ukraine, US–China tensions, and national elections set to impact organisations – all of which have the potential to alter the global risk landscape quickly & dramatically and make it another year of considerable economic uncertainty.
As consumers continue to choose to seek out socially ethical companies who actively promote green operating models and environmentally friendly products, ESG is expected to be a key concern for most businesses in 2024. According to a recent PWC survey, 66% of executives think their organisations should make expenditures that address ESG issues relevant to their business even if it reduces short-term profitability.
According to the recent KPMG Chief Risk Officer Survey, regulatory change, compliance issues, and cyber security threats are the biggest challenges facing organisations over the next 2-5 years. As organisations continue to digitise processes, ensuring system security, managing data privacy & addressing cyber threats will be a top priority for businesses in 2024. So too will regulatory change management – as organisations continue to grapple with a whole host of regulations, laws, and jurisdictions.
Progressive organisations realise that preparation & planning prevents poor performance. They understand how an effective GRC programme can address many of these emerging factors – ensuring an organisation can meets its long-term objectives.
8 GRC Trends to Watch Out for in 2024
As we head into 2024 there has never been a better time to think about your GRC plans & strategies for the new year. To drive success, risk teams must plan ahead and embrace some of the latest GRC technology capabilities that will help them to understand & control the most impactful risks to ensure a sustainable future. Here are the top eight GRC trends for the new year that every GRC professional must utilise to successfully manage risk and remain compliant.
- Using Risk to Add Strategic Value
‘Risk’ isn’t necessarily a list of bad things that need to be controlled & mitigated. Taking well-planned, calculated risks can help an organisation to achieve its strategic goals & objectives. To make the right decisions, businesses must be able to analyse and understand the positive and negative impact of each choice they make on their strategy.
By aligning risk management with their long-term goals, organisations can use the data to generate meaningful insights that support them to make decisions and take the right risks in pursuit of their strategic objectives. With a more integrated framework where ‘risk’ and ‘strategy’ are managed in the same platform, organisations will be able to understand the direct correlation between the risk-based decisions they make – and the impact that has on both enterprise performance and strategic progression.
Michael Rasmussen, the self-proclaimed Godfather of GRC has listed this integrated approach as the next stage on his GRC maturity model and affectionately named it ‘GRC 6.0′ or ‘Business Integrated GRC’. By adopting this approach, organisations will be able to assess their risk landscape from every angle and make better decisions that align with their overall goals.
Linking risks to strategic goals builds an agile business that can make fast decisions and implement change at speed, affording organisations a competitive advantage. In a nutshell, businesses must understand that risk can very well give rise to strategic opportunities. Aligning risk management with strategic goals & objectives will provide organisations with the business intelligence required for management teams to successfully pursue their strategy while being well-informed of any potential risks or road blocks. Integrating risk management with strategic planning in a GRC platform that unifies risk, compliance, audit, ESG, and cyber functions alongside comprehensive risk management will critically facilitate communication, information sharing, and cohesive visibility across the entire enterprise.
- IT GRC is a Must!
In a world where the line between the digital and physical worlds is becoming increasingly blurred, understanding GRC in both a digital and physical context has never been more vital. The need to strike a balance between the two has promoted the emergence of a contemporary approach to GRC that integrates these emerging digital requirements – resulting in the term ‘IT GRC’. In 2024, organisations must be flexible enough to manage the complexity of IT environments alongside the traditional physical risk and compliance requirements they are exposed to daily.
IT GRC is the term used to refer collectively to a whole host of technology capabilities that enable an organisation to ensure their company data is secure by managing IT-related risks, threats, and vulnerabilities, and ensuring compliance with data privacy laws & regulations. It also involves implementing a strategy that ensures IT infrastructure is fit for the future – making sure systems, software licenses, and equipment are up to date, and implementing business continuity & disaster recovery plans. By building a robust IT GRC programme, organisations can ensure their digital risks are managed effectively, protect company systems & data, maintain compliance with data privacy laws & regulations, and guarantee IT infrastructure is fit for the future: GRC technology can provide a unifying platform for the successful implementation of a comprehensive IT GRC programme.
- AI Based Knowledge Centric GRC
One of the biggest highlights of 2023 was the mass adoption of generative AI. In 2024, AI-based knowledge-centric GRC will emerge as a key trend as GRC platforms introduce AI to analyze risk data and provide likely outcomes and scenarios. We expect to see AI used in GRC programmes across a diverse range of areas including automated risk assessments, AI-powered threat intelligence, regulation monitoring, and fraud detection.
According to GRC 20/20 Research’s Michael Rasmussen, the journey away from legacy GRC systems and toward agile GRC solutions that are highly intuitive and engaging, began about five years ago. On Michaels GRC maturity model he states that “We have what I call GRC 5.0, cognitive GRC”, which will see existing integrated and agile GRC platforms leveraging artificial intelligence technologies. He adds “This however comes with the heightened responsibility of implementing robust AI governance frameworks to ensure that AI systems operate within regulatory requirements and ethical boundaries”. 2024 will see organisations embracing cognitive AI to rationalise controls, automate control tests, identify missing controls, and enhance control test planning efficiency – this will not only reduce costs but also enhance the risk programme’s effectiveness.
- Risk & Resilience is Key
2024 is a risky time to be in business, and as companies seek to navigate a complex landscape of interconnected risks, they must focus on solidifying their overall resilience stance. True strategic risk management will build organisational resilience and ensure long-term growth, couple this with comprehensive business continuity planning & organisations will be well placed to achieve future success.
Organisations must focus on strengthening their risk management and business continuity programmes in the coming year to ensure future resilience. This involves predicting, anticipating, and proactively managing risks, aligning risk management with strategic objectives & enterprise performance, and modernising BCM plans with business process modelling to understand the full impact of unforeseen events in terms of man hours, cost, downtime, and processes impacted.
Organisations must prioritise business continuity and incident management to effectively respond to unexpected events and minimise their impact on operations. Business continuity plans ensure operations remain stable during and after a disruptive event while incident management supports organisations to identify, analyse and resolve incidents quickly. By merging these two functions, businesses can effectively enhance their preparedness and response to incidents & disruptions, ensuring a quick and effective recovery.
The ‘Camms Resilience’ solution can help prepare your business for disruptions and ensure long-term sustainability. Use the solution to identify your business critical processes and create a business process register, prepare best-practice BCM plans, perform Business Impact assessments (BIAs) to understand the impact of unforeseen events in terms of FTEs, cost and man hours, and execute your BCM plan based on incidents logged to get your organisation up and running in line with RTOs.
- ESG is Here to Stay
New reporting and disclosure requirements will create a new wave of sustainability and ESG reporting for 2024 and beyond. It will also be the year when sustainability reporting will likely move from voluntary to mandated, requiring reporting to be sophisticated and synchronised. It also could shape up to be the year that companies prepare to report under new regulations. These will include the EU’s Corporate Sustainability Reporting Directive (CSRD), Task Force on Climate-Related Financial Disclosures (TCFD), and new climate related disclosure requirements introduced by the U.S. Securities and Exchange Commission, and the California SB 253 and SB 261 guidelines.
With these new ESG reporting standards emerging, ESG related compliance should be high on the list of executive management. Companies need a formalised way to capture and report on ESG related information to provide proof to regulators and transparency for customers. GRC platforms provide a framework to capture ESG related information from across the organisation from different stakeholders so it is centralised and can be easily reported on. API integrations allow data from other systems & sources to be pulled directly into the platform, and online forms, surveys, and questionnaires enable ESG teams to collate data from various stakeholder’s and build a true picture of the organisations ESG credentials. Once this is established teams can set goals & KPIs of where they would like to be – and track progress – providing proof of continuous improvement.
Adopting a GRC framework for ESG can help organisations to achieve their sustainability goals more effectively, reduce risk, ensure compliance, and enhance their reputation with stakeholders, ultimately leading to improved financial performance and long-term success. Benefits include improved transparency and reporting, enhanced decision-making, better stakeholder engagement, operational efficiency, and a distinct competitive advantage. Demonstrating commitment to sustainable practices and strong governance can lead to improved brand reputation, increased investor interest, and better access to capital.
2024 will be an important year for ESG and will heavily focus on transparency, accountability and working to engage more companies to take action and disclose their climate related risks.
- Heightened Regulatory Scrutiny
The regulatory landscape in the new year is poised for substantial changes with AI regulations leading the charge. Regulations such as the EU’s new AI act and the US AI Bill of Rights will establish AI guidance – encouraging organisations to adopt more responsible and transparent AI practices.
in 2024, businesses will experience a level of regulatory intensity rarely seen – in the form of the high volume of regulatory issuances, the complexity and breadth of regulatory supervision, and the impact that these changes impose across the organisation. The successful navigation of this new landscape will require organisations to effectively integrate the right technology and regulatory acumen to enhance operations and adapt to regulatory changes.
Organisations must embrace GRC technology that links to regulatory content providers to easily scan the regulatory horizon for updates and to streamline & automate the regulatory change management process. Organisations must formalise regulatory compliance to ensure they keep up with implementing new policies, standards, and controls aligned with new regulatory requirements. While this is a vital part of any business compliance programme, it can be difficult to keep up with constant changes. GRC platforms deliver effectiveness and efficiency, using technology for workflows, task management, and accountability documentations. This formalises the implementation of the change and enables businesses to easily understand which business processes are affected and what needs to be changed – allowing the organisation to be agile amidst change.
- Continuous Third-Party Risk Monitoring
In 2024, continuous third-party risk monitoring will take center stage, driven by the need for real-time insights into vendor performance, violations, and data breaches. Its not just technology and service providers that pose a risk, supply chains remain strained because of geopolitical tensions, labour-related issues, rises in fuel & energy prices, and difficulty obtaining products & raw materials.
It’s vital for third-party risk management teams to plan out how to address their most significant vendor related risks across areas like cybersecurity, reputation, supply chain failures, system downtime, bribery & corruption, and environmental, social, and governance risks.
In the recent KPMG Chief Risk Officer survey, 67% of companies surveyed indicated that they are ‘well’ or ‘very well’ prepared to respond to and appropriately manage third party risk. This is a clear sign that large organisations are prioritising this significant risk area and it will continue to be a trend in 2024 as small to medium sized businesses realise the benefits. Gartner further predicts that 60% of all organisations will leverage TPRM assessments as a key factor in everything from partnerships to vendor contracts.
Organisations must create an online vendor library for all types of vendors, capturing vital information around cost, SLAs, and performance – making it easier to manage and track vendor relationships and understand the risks they pose. Regular vendor risk assessments and vendor benchmarking & scoring should be carried out to uncover potential problems and address them – this will allow your organisation to consistently evaluate and compare vendor risk profiles. Firms should implement automated monitoring of key metrics such as SLAs, KPIs and other industry benchmark standards to provide continuous oversight of vendor performance. Empowered by the information risk-related data produces, organisations gain clarity when comparing vendors. Formalising the third party risk management process also allows organisations to standardise the supplier onboarding and offboarding process and manage contract renewals centrally.
- Objective-Driven GRC
In 2024, objective-driven GRC is a burgeoning new trend that will be adopted by progressive organisations. Achieving company objectives is a key priority for Boards, which requires senior executives to map out their goals and understand what projects, tasks, and actions need to be completed across the organisation to achieve them. Business decisions regarding growth and strategy are always strewn with risk, and many initiatives are subject to compliance requirements or delayed by unexpected incidents; it also takes strict governance to deliver these strategic initiatives on time. This is why adopting an objective-driven approach to your GRC programme will enable a company to understand which risks are worth taking in pursuit of strategic objectives, which governance procedures should be in place to keep the strategy on track, and which compliance requirements must be adhered to throughout the process. More importantly, it will also enable companies to implement controls to reduce any critical risks that may derail their strategy.
Achieve Your GRC Goals with Camms
Organisations that adopt cloud-connected platforms like Camms will be able to go beyond integrated GRC to a business centric approach that facilitates a seamless connection between risk, compliance, and strategic objectives by having access to real-time data insights – required to navigate an uncertain future.
Keen to learn how our easy-to-use solution can provide a comprehensive integrated approach to your evolving GRC goals? Request a demo now!