Analysts expect the global risk analytics market to be worth $64.7 billion by 2026. Is your business one of the thousands searching for better risk management processes? Are you looking for a clear explanation of your options?
One common question is about the difference between ERM and GRC. The similarities between these methodologies often lead to confusion. ERM and GRC have some key differences, though.
Find out more about ERM and GRC. Learn about how they differ from each other and which one might be best for your business.
What Does ERM Mean?
ERM stands for enterprise risk management. It’s a methodology that considers risk management strategically from the perspective of the whole enterprise.
The goal of ERM is first to identify and monitor risks that affect how well an organization can achieve its core objectives. Then it helps the business mitigate the impact of those risks on operations and earnings.
What Does GRC Mean?
GRC stands for governance, risk, and compliance.
Governance is what directs and controls an organization. A risk is a possible event that could cause harm or loss or make it harder to achieve objectives. Compliance ensures that a company follows the required standards or guidelines.
GRC vs ERM
ERM and GRC are ways for an organization to address operational risks. They try to ensure that the organization continues to meet its objectives. However, each method approaches the problem differently.
How Does GRC Work?
The ideal GRC system integrates the governance, management, and assurance of business activities related to risk and compliance. In practice, GRC tends to be a top-down approach focused primarily on compliance.
Governance, risk, and compliance become their own sets of processes. Each component has its own practitioners, subject-matter experts, and managers. GRC is often a siloed approach to risk management.
How Does ERM Work?
ERM includes all areas of risk exposure for an organization. It encompasses all business functions, including governance and compliance, in a framework approach. The framework identifies and assesses goals, requirements, and root-cause risks.
The framework then helps document risk-mitigation strategies.
ERM takes an enterprise-wide view, so it can identify risks that affect more than one department. An effective ERM framework helps to streamline controls and reduce redundancy. ERM emphasizes cross-functional teams and implementation at all levels.
GRC and ERM Software Solutions
Most organizations implement GRC or ERM using a software platform. Software can help you streamline and automate many of your risk management processes.
GRC software makes it easier for companies to ensure they meet compliance and risk standards. It streamlines the process of assessing risks and complying with the regulations that apply to your operations. It automates routine audits and other compliance processes.
ERM software is cloud-based software that helps organizations identify financial, strategic, and operations risks. It helps you weigh these risks against business opportunities. You can more easily develop processes to prevent or prepare for them.
ERM software improves your risk forecasting. You have more time to analyze and mitigate potential threats. You also have better information to make better decisions.
Choosing a Software Program
Many GRC and ERM software solutions are available. These platforms may seem like a large investment. You have several factors to consider in order to maximize your ROI.
Analyzing your current risk management processes is the first step. Then you can look at the impact a software program will have on your workflows. You can use an ROI calculator like the one from riskonnect.com to help make your decision.
Improving Your Risk Management Processes
GRC and ERM are both ways to manage risk for your business. If you’re primarily looking for a compliance-based system, GRC may be the best choice. If you want a broader risk management framework, ERM is more likely to have what you need.
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