What is GRC Risk Management: Detailed Process Guide

Poor risk strategy can set off unprecedented events – even for well established players in the market. Back in 2023, Oreo manufacturer Mondelez notified their employees about a data breach after their third-party legal firm was hacked, leaking sensitive personal data like addresses, social security numbers, and date of birth.

If you don’t invest in risk management, cases like this one should be a lesson on its importance. Over the years, managing risks moved away from a separate activity to a part of governance and compliance – effectively known as GRC. 

GRC came to effect in response to siloed systems and disjointed processes, which resulted in unsynchronised information and activities. This led to chaotic and poorly managed processes. This article aims to explore the risk component of this trio.

TL;DR

GRC risk management process involves managing financial, operational, and security risks in a structured manner.

GRC risk management process involves building a strategy, engaging all stakeholders, conducting risk assessment, determining the right response plan, implementing corrective controls, continuously monitoring the systems, and implementing automation

What is GRC risk management?

GRC risk management is a structured approach to managing various operational, security, financial, and legal risks across the cloud infrastructure. It involves identifying IT risks, analyzing their impact, monitoring the risk environment, determining mitigation strategies, and developing business continuity plans.

The ultimate goal of risk management is to meet business goals and stakeholder expectations with minimum roadblocks. IT teams generally prioritizes risks based on the risk appetite, history of incidents, business objectives, and regulatory requirements among others.

Though the risk management lifecycle heavily relies on technology, people, processes, and policies also factor in to add resilience to your assets. Two of the most common methods to find risks are internal audits and risk assessments.

“If you don’t invest in risk management, it doesn’t matter what business you’re in, it’s a risky business.” – Gary Cohn, Director of the U.S National Economic Council 

Also check: Top GRC Tools Comparison with Features & Reviews

GRC risk management process: a detailed blueprint to success

While there is no objective or right way to manage risks in a GRC, we have curated an approach that is approved by auditors and recommended by industry experts like CISOs, NIST guidelines, International Risk Governance Council.  

These steps provide a structured approach to a GRC risk management process: 

1. Build a GRC strategy

Having a working plan detailing a roadmap aligned with your goals and specific to your industry is crucial to understand your risk landscape as it is a complex undertaking.

A critical piece of building block to consider at the strategy building stage should be the risk tolerance level. Understanding this bit gives management sufficient context to make the risk decisions, frame privacy policies, and respond adequately.

Your GRC risk strategy should also address how risks impact individuals, operations, and the bottom line. The strategy could be a single document or multiple documents for separate risks and threats.

A key component of devising a strategy is writing the policies. Your policies should be comprehensive to cover all types of risks that affect business objectives such as:

• Third-party risk management
• Vendor risk management
• Data protection risk assessment
• Information security policy management 
• Supplier security policy 

2. Engage all stakeholders

The first step to translate your plan into action is to ensure that everyone on board is on the same page and understands their roles and responsibilities. This includes the risk owners, process owners, IT teams, compliance teams, system administrators, third party service providers, legal consultants, and more.

When the involved parties have an appropriate idea of the technologies, products, and activities, they can incorporate their ideas and feedback into the process. The International Risk Governance Council (IRGC) defines four phases where stakeholders fit in:

• Pre-assessment – Here, risk managers define and frame a board picture of the overall risk posture and evaluate where different stakeholders fit. Stakeholders contribute to its improvement using their experience, recommend changes and timelines, and identify urgencies.
• Risk appraisal – The second phase addresses two components; risk assessment and concern assessment. Risk assessment links between risk agents, causes, and consequences while concern assessment uses socio economic factors that may contribute to risks.
• Risk decision – In the third phase, you decide whether to accept, tolerate, transfer, or mitigate the risk. Stakeholder involvement in this stage helps to ensure that economic interests or compliance requirements are considered in the decision-making process.
• Risk management – In the final stage, all the information and insights from the previous stages are consolidated into an actionable plan. Stakeholders help to determine the most appropriate option to manage risks and implement the plan.

Communicate your strategy with all stakeholders at every stage of the risk lifecycle to add transparency. Develop a communication system to meet your risk mitigation objectives, address issues adequately, and conduct the processes effectively.

3. Conduct risk assessments

Risk assessment helps teams to understand the gap between the goal and the current posture. This insight helps to determine the corrective measures and implement controls. 

Risk assessments are not a point-in-time activity. Rather, it is a recurring one due to the dynamic nature of the threat landscape. It generally involves the following steps:

• Know your sources: Identify all common threat sources and their characteristics. To do this, assess the intentions, capabilities, and targets for adversarial (threats arising from external malicious actors) vulnerabilities. Assess the potential range of impact for non-adversarial (unintentional or internal) vulnerabilities.
• Identify the vulnerabilities: A vulnerability assessment helps you understand the extent to which the identified threats can affect your organization. Determine the mitigation strategies and select the appropriate controls based on the severity of the vulnerabilities.
• Assess the likelihood of adverse impact: The next step is understanding how susceptible your organization is to each vulnerability. To evaluate this, you should know the characteristics of the threat’s sources, existing vulnerabilities, intent, and the effectiveness of your controls or measures to prevent the threat from being successful. 
• Evaluate the impact: Once you know the impact, determine the adverse effects of threat events in terms of the potential damage they can inflict. Impact assessment involves identifying the potential targets of the threats, the people, and even physical resources.
• Determine the risks: Finally, determine the severity of the risks your organization faces based on the impact of the threat and the probability of its success. You can score the risks in order of severity to prioritize high-risk events. The result of risk scoring will be used to plan the next steps—your response plan.

4. Determine a response plan

The risk assessment should give you a fair idea of the risks and overall posture. Use the assessment result to determine the right actions – accept, avoid, mitigate, or transfer the risks. This decision will be based on your risk tolerance level; the level of uncertainty your organization can absorb without impacting key operations. Let’s break down these

• Accept: If the identified risk is within the tolerable range, you can choose to accept it. The impact of the accepted risk can be evaluated in terms of low, moderate, or high. This depends on the specific situation and consequences of not accepting it.

For example, if your organization is located in an earthquake prone zone, you may accept the risks of earthquakes to data centers if the cost of addressing it is lower than the possible damage, given that the chances of the damage is very low.

Similarly, if you are a federal agency responding to a time-sensitive situation like a bank heist, it is acceptable to share sensitive information with unauthorized personnel.

• Avoid: If the cost of accepting the risk exceeds the tolerance limit, we recommend avoiding it. 

In certain situations, organizations conduct certain activities or use a new technology that adds unacceptable risks to the IT infrastructure. In such cases, the ideal response is to halt the activity altogether, rather than devising methods to mitigate its associated risks.

For example, let’s say you want to set up a connection with a third-party domain that adds unacceptable risks to your systems. In this case, avoiding the risk is recommended if using controls is not a practical solution.

• Mitigate: When you cannot accept, avoid, transfer, or share, mitigating it is the appropriate response. An example of risk mitigation is developing policies that prevent users from traveling with organization owned endpoint devices to prevent malicious actors from gaining unauthorized access.
• Share: If your organization has the option to shift the liability or responsibility of risk management to another entity or organization, transfer the risk.

It is important to note that this practice is not an alternate solution to mitigate or avoid; transferring risks does not reduce the probability of threat events or minimize their impact. For this reason, risk sharing is not as widely adopted in the public sector compared to the private sector as the former is liable to government legislation.

Ideally, risks are transferred if it is determined that the receiving party has the capacity, resources, and expertise to mitigate them better.

For example, if an organization lacks adequate physical security to protect its hardware assets, partnering with another organization to share a facility reduces the likelihood of a physical compromise.

Must check: Benefits of GRC – Why Siloed Approach No Longer Works

5. Implement the right controls

To mitigate risks that cannot be accepted or transferred, you need to implement the right controls. Each control should address a specific risk and fulfill one or multiple objectives, such as minimizing risks, reducing cost, meeting regulatory requirements, and so on.

Risk management controls can be broadly classified into preventive, detective, and corrective.

Preventive controls are the first line of defense against threats. These are proactive measures that aim to stop them from being executed in the first place. 

However, practically speaking, it is not possible to stop 100 percent of incidents successfully due to the continuously evolving nature of threats. 

Examples of preventive measures include:

• Access control to systems, files, or applications to prevent unauthorized access
• Firewall to block unauthorized access to networks and cloud-hosted systems
• Employee training and security awareness programs to prevent

Detective controls help to identify threats that have already infiltrated or contaminated your system. These are reactive in nature, compared to preventive controls that are proactive.

Similar to preventive controls, detective measures are also not always 100 percent effective as sophisticated threats may escape the radar. 

Examples of detective controls are:

• Intrusion detection systems that monitor networks and files for suspicious activities or violation of policies
• Log monitoring systems that review activity logs generated at a specific time or for a specific system to identify anomalies
• Internal audits to identify instances of non-compliance and vulnerabilities

Corrective controls are implemented to control and remediate damages after it has already been inflicted and minimize the risks of a similar incident in the future. 

These controls are designed to help IT teams minimize the impact of threats on time before they inflict significant damage. 

Examples include:

• Data backups to recover from incidents like data theft, data tampering, and data loss
• Patch management process to close gaps or vulnerabilities that caused the incident
• Business continuity plans to recover from an incident without disrupting operations

Some controls combine all three control capabilities in one. For example, antivirus tools block malware or malicious codes from running on your computer, acting as preventive control. Secondly, it continuously monitors your systems for corrupted files or viruses, acting as a detective control. Finally, it removes malicious files or codes that have penetrated your system, like a corrective control.

A widely adopted approach to GRC risk management processes is the use of common controls. If the functionality of a control applies to more than one system or program, it qualifies as a common control. Incident response controls, authentication controls, audit and accountability controls, and access controls are good examples.

6. Continuously monitor your control environment

Once you have implemented the controls, the next step to the GRC risk management process is to continuously monitor them. This helps to ensure that you have adopted the right measure to comply with a compliance requirement, evaluate its effectiveness, and identify risk inducing changes to your environment.

Here are the metrics you should monitor:

• Monitor compliance: Helps to ensure that your measures align with the applicable industry standards and federal legislation. This includes implementing controls to address gaps found during the risk assessment.

While compliance risk monitoring is usually simple, as it involves implementing a set of security controls, the challenging part is evaluating whether the measures are correctly implemented. This includes analyzing compliance failures and revising the risk management process to address the failure.

In most cases, re-implementing the same security risk control correctly patches the issue. If this does not work, you may have to determine and develop another measure.

• Monitor effectiveness: To determine if a control is working as intended, you should monitor its effectiveness by assessing whether the risk has been reduced to an acceptable level. If it has not been reduced to the desired level, the control is not effective.

Determining the effectiveness of risk controls is challenging as simply implementing controls may not guarantee its reduction. This usually happens due to the complex nature of operating environments that create unprecedented issues, system changes due to implementation of controls, and changes in risk factors like vulnerabilities.

If the risk management initiatives are ineffective, you may have to revise the previous steps that led to determining a specific risk response measure. This may include conducting a risk assessment again and choosing a different control.

• Monitor changes: Apart from compliance and effectiveness, you have to monitor changes in the control environment to identify potential risks that may impact your business processes, assets, and operational efficiency.

Your IT environmental and operational system is continuously undergoing changes like new processes, admins, policies, and technologies. These changes may introduce new vulnerabilities and change the risk profile of the entire organization.

To stay ahead of these uncertainties, you should monitor changes and update control measures if needed.

The frequency of monitoring should be determined by factors such as the potential impact of unaddressed risks, the frequency of changes in the operating environment, and the rate at which risks are changing.

7. Adopt automation techniques

Broadly speaking, there are two approaches to GRC risk management processes – manual and automated. 

While the manual method works, automation is recommended if feasible. This is because manual processes are not sustainable in the long term as scaling adds more complexity, processes, tools, and requirements – making it error prone, slow, and resulting in disconnected processes.

Automated systems, on the other hand, are more efficient, faster, sustainable, and cost-effective in the long run. For example, GRC tools like Sprinto help you run a risk management program. Some of its key capabilities are:

1. Integrated risk assessment: Map all risk to the right control or compliance criteria to minimize the impact of risks, reduce residual risk and correctly assess risk impact based on industry benchmarks. 
2. Risk monitoring: Continuously and accurately monitors risks, flags anomalous activities, and contextualizes each control failure. The role-based remediation system notifies issues to the risk owner on time to ensure timely resolution.

3. Eliminate silos: Consolidate risk information against any compliance framework like SOC 2, ISO 27001, NIST, and more into a single dashboard. A comprehensive risk profile helps you gain clarity on the transferred, mitigated, and accepted risks.
4. Score risks: Use a pre-built risk library to scope out risks, add custom risks, and assign impact scores and likelihood of recurrence. Build a risk thorough risk register that identifies risks unique to your business and ensure accurate risk assessment.
5. Manage risk policies: Access a library of pre-build, fully customizable risk policy templates. The policy control center facilitates one click acknowledgement, automatically maps polices to framework, and policy sharing with auditors.
6. Quantify risks: Go beyond just identifying risks by evaluating them based on its impact using benchmarks to understand the actual impact of risks, determine their severity, and start the treatment process.
7. Reuse common controls: Manage risks across multiple compliance requirements using predefined mapping criteria. This way, you can reuse and cross-map controls from existing frameworks to eliminate effort duplication.
8. Calculate risk mitigation health: Use the risk mitigation health parameter to calculate the average health of a control linked to a risk. This helps you understand the percentage of completed checks that are mapped to controls.
9. Risk reporting: Capture the status of risks and controls with detailed and easy to understand reports based on real-time data. Get a granular picture of risk status from a single view, identify patterns, and make accurate risk decisions.
10. Vulnerability assessment: Proactively measure risks by running automated checks on vulnerability controls and prioritize risk remediation based on policies. Integrate with multiple vulnerability scanning tools to get an accurate view of risks.

Want to see how Sprinto works? Get a demo to know how we can help you. 

FAQs

What are the types of risk in GRC?

In GRC, common business risks include financial risk, reputational risk, operational risk, cyber risk, non-compliance with government regulations, lack of effective governance, and more. 

What are the best software solutions for GRC risk management?

Some of the best solutions for managing GRC risks based on popularity, user feedback, and industry reports are Sprinto, Secureframe, AuditBoard, Workiva, Hyperproof, Vanta, and LogicGate Risk Cloud.

How do you mitigate risk in GRC?

To mitigate risks in a GRC module,  develop a risk management plan, include stakeholder inputs, conduct risk assessment, determine a mitigation plan, implement  

Want to see how Sprinto works? Get a demo to know how we can help you.