The Bottom Line: After a two-year period of decline, GRC spending growth returns in 2010, expanding by 3.9% to nearly $30B.
Ask 10 companies to describe governance, risk management, and compliance (GRC), and you’ll likely get at least 20 definitions. Therein lies the rub: GRC is many things to many people, and not a singular product with discrete functionality. For some, it’s tightly tied to security. Others view it as fraud and audit functions. Where does environmental health and safety (EH&S) lie? What about sustainability?
Over the last seven years, GRC has continued to change. Gone is the white-hot fixation on Sarbanes-Oxley (SOX) compliance. Many organizations view it as yesterday’s news, even though the principles that underpin SOX and other regulations have largely been incorporated into everyday functions as a part of standard procedure.
A more mature approach has emerged to address GRC fundamentals in all their shapes, sizes, and colors, with better risk management looming larger in executive thinking. Business policy has also muscled its way onto the scene, lending a governance flavor long missing from the GRC agenda. As one CFO of a large industrial firm put it, “I want no more surprises. We must operate with our heads up, eyes open, connecting the dots between risks, policies, compliance mandates, and overall performance.”
In 3Q09, AMR Research conducted a GRC study to assess plans, motivations, and spending priorities at 151 U.S. companies of all sizes and across industries. Our respondents also had a wide range of job responsibilities within their organizations. The study confirmed what we had suspected: GRC programs and requisite spending dropped in 2008 and 2009. Just as important, however, spending is expected to expand next year. We reached the following conclusions:
- U.S. companies will spend $29.8B on GRC activities in 2010, up 3.9%.
- Risk management remains the top GRC motivation.
- Better visibility leads to an agile response.
- Efficiency equates to operating at the highest impact and lowest cost.
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