What's the business case for GRC?

Does governance, risk and compliance (GRC) really pay off? It's a valid question for any organization that's looking to formulate a corporate strategy and implement software for managing GRC.

Leaders at financial services company Fiserv say the answer for their organization is an emphatic "yes," citing a number of concrete benefits. Let's dig into the details of their GRC business case.

In this Fiserv GRC case study:

-- http://www.csoonline.com/article/674707/egrc-vs.-it-grc

-- Upgrading risk management processes

-- Benefits captured

-- Overcoming hurdles in GRC implementation

-- Lessons learned

Fiserv's Environment

Fiserv was founded in 1984 and currently has about 19,000 employees operating out of some 200 locations worldwide.

Fiserv is a global provider of information management and electronic commerce systems for the financial services industry, and offers integrated technology and services for clients. It provides technology solutions in five areas: payments, processing services, risk and compliance, customer and channel management, and transforming data into actionable business insights.

The company has more than 16,000 clients worldwide, including banks, credit unions, mortgage lenders and leasing companies, brokerage and investment firms, and other businesses. Fiserv helps these clients address challenges such as attracting and retaining customers, preventing fraud and meeting regulatory requirements.

[Also read 12 tips for implementing GRC]

In 2008, Fiserv decided to embrace a formal GRC strategy "because it was the best way to manage through a thicket of simultaneously occurring changes in our business and regulatory environment," says Murray Walton, senior vice president and chief risk officer.

The company's business strategy has evolved in recent years from a holding company to an integrated operating model, creating greater complexity in the organization and the solutions it provides to clients, Walton says.

"The external environment has also changed, and today we face more government regulation and non-government standards, such as [PCI DSS]," Walton says.

"Navigating all these challenges at the same time required a much more structured approach to governance, risk and compliance than our previous spreadsheet-driven methods."

Before deploying Agiliance's GRC software, called RiskVision, "I would have characterized our environment as diversity on steroids," Walton says. "We had diversity of understanding about what risk assessment and monitoring means. We had diversity of understanding about what was required or expected, and diversity of methods and practices. As a result, we had an absolutely enormous challenge to try to develop a picture of our enterprise risk and enterprise compliance."

There was no common understanding or vocabulary or process related to risk, Walton says. "The good news is that, with enough effort, we were able to manage risk, but there was a challenge of being able to document that to our board of directors or regulators, and to look beyond the horizon. All of a sudden, our diversity had become a risk itself."

Upgrading Risk Management Processes

Today, the company's GRC focus is on risk assessment, compliance monitoring, policy management and remediation tracking. Because Fiserv provides technology Asolutions to the financial services industry, it is regulated by the FDIC, as if it were a bank itself.

Since the 2008 market collapse, "it has been critical to our regulators and clients that we have rigorous processes in place to identify, understand, control, remediate and monitor our risk and compliance posture," says Raji Ganesh, Fiserv vice president of risk and compliance.

To meet that challenge, the company realized it had to upgrade its processes and tools, and it standardized its approach to GRC across an enterprise where decentralization formerly ruled.

Fiserv began its program upgrade knowing that it needed a technology solution to support its initiatives. "But we were concerned that the technology solution could drive the program rather than the other way around," Walton says.

"There are some solutions in the market that, in my view, appear to be dogma-driven. Someone thinks they know the answers and have a one-size-fits-all approach to how risk and compliance monitoring ought to occur."

[Also read the special report IT GRC tools: Control your environment]

The company wanted software that addressed the widest possible range of regulatory and third-party standards. "If we only needed to be compliant with Gramm-Leach-Bliley or with HIPAA or with some other single regulation," then flexibility wouldn't be as much of a concern, Walton says. "But all those [regulations], and more, matter to us."

First, Fiserv carefully built its GRC program to meet the organization's needs, and then it selected the technology to support that program. Managers opted for RiskAVision after exploring many alternatives in the market. So far, they have been pleased with the technology, and say it has had a transformative effect on the risk-management program.

"RiskVision has empowered our risk-management staff to operate on a higher, more strategic plane," Walton says. "In the past, our team spent a disproportionate share of its time manually collecting and manipulating data. Just getting to a baseline understanding of our risk profile consumed most of our available horsepower, leaving far too little time for analysis and problem-solving."

The software has enabled Fiserv "to turn our paradigm on its head," says Ganesh, and to shift her team of former risk tacticians and number crunchers into enhanced roles as risk strategists, allowing them to have a much greater effect on the organization.

"It allows us to get beyond that almost clerical use of people," she says. "The system does that [number crunching] really well. It has taken our people from being focused on minutia to focusing on the big picture."

Benefits Captured

The software automates the tasks that were consuming the majority of this team's time, including data collection, aggregation, workflow and reporting. Now, armed with useful, organized output from the system, "they can primarily focus on deeper analysis and engagement that leads to more effective remediation and control of the risk in our organization," says Ganesh.

Fiserv is also benefiting from the workflow and configuration management components of the GRC software.

"In a complex enterprise like ours, inputs and approvals may be needed from multiple units within the company to complete a single assessment," Ganesh says.

Producing a risk profile via the older method would have required seven to 10 more staff members and would have cost Fiserv an additional half-million dollars

"RiskVision workflow management expedites our processes and eliminates sneaker-net movement of files. Also, organization and hierarchy changes that formerly required many hours of manual effort to implement are now a simple matter of system configuration that takes only minutes, he says."

Reporting is also simplified by the GRC system's standard reports and its data export feature, which allows the firm to create reports using tools of its own choosing, Ganesh says.

The software allows Fiserv to produce a dashboard for managers, which shows them a color-coded picture of exactly where risk resides in the organization. "It makes it abundantly clear that this is where you ought to be focusing on remediation efforts, investments, policy, people issues," Walton says.

"Rather than spending all that time Afiguring out where the risk is, we now get that intelligence from the system, and can spend more time addressing what we've found."

The company estimates that to produce the type of detailed risk profile it gets from the software over a three-month period now, it would previously have taken about six months using Fiserv's old manual process. The older method would also have required seven to 10 more staff members and would have cost Fiserv an additional half-million dollars.

Another benefit is the increased credibility the enterprise risk management team has gained in its interactions with management, regulators and members of the board of directors. "We have much broader, deeper and better-presented data than ever before," Walton says.

"I can now engage with any of my team's constituencies with greater authority and confidence, and this has strengthened all of these key relationships."

Because it has contacts with other corporate users of the software, Fiserv has benefitted by learning about how others have successfully handled GRC processes. Ganesh is a member of an advisory group for users of the product, and she and Walton have taken advantage of formal and informal opportunities to interact with other companies using Agiliance.

"Although every company is different, the journey to maturing the risk management function has common elements, whatever your business," Ganesh says. "We have appreciated the opportunity to interact with others who are at different points on the maturity curve, and who have already figured out how to meet a challenge that is new to us."

Overcoming Hurdles in GRC Implementation

Exchanging best practices and getting advice from more experienced GRC practitioners was especially useful for Fiserv because the company faced a number of challenges during its GRC implementation.

For example, when the enterprise set up a new comprehensive information security standards program about a year and a half ago, that created another rule set for GRC.

"So now we were adding another layer to our control policies, and we needed to learn how to build that" into the software, Walton says.

"This was a need we didn't anticipate, but we had the ability to talk to others and our advisers at Agiliance, who recommended a policy-management module that links directly with existing RiskVision content. It saved us many months and at least a couple hundred thousand dollars of exploratory work."

It's important to remember that GRC is a process supported by technology, and companies should avoid focusing only on the software

An even bigger challenge for Fiserv was creating a common understanding of the logic, discipline and vocabulary of professional risk management, Walton says.

"Fiserv was formed through the acquisition of more than 140 companies over the past 26 years, and until a few years ago most of our business units operated with considerable autonomy," Walton says. "They managed risk the way they always had, and their practices pre-2007 reflected varying degrees of maturity and sophistication. Lacking common systems and processes across our enterprise, we achieved diverse results."

The value of a packaged solution is that it doesn't skip steps, Walton says, "It enforces a rigorous, process-driven approach to risk management that is inherently missing in the kind of homegrown, paper-based processes we used before."

The RiskVision implementation has been successful largely due to the comprehensive training of users within the company, and because the tool itself anticipates that users will approach the system with varying levels of understanding.

"Essentially, there's a lot of help built into the tools, and the user interface is solid," Ganesh says. "In fact, Agiliance was willing to take our suggestions and incorporate them as core product functionality."

Because the software was new for everyone, "we chose an implementation path that included a lot of professional services support," Ganesh says. "This allowed us to stage our roll-out on time, with no surprises, and excellent user support. Usability was one of our most heavily weighted selection criteria, and we feel like we hit a home run with RiskVision."

[See more of CSOonline's in-depth case studies in security and operational risk management]

The most challenging aspect of the GRC implementation was security. "Because we have so many business units and a complex hierarchy, the ability to set user permissions at a granular level is very important to us," Walton says. "We utilize a 'least privilege' security model, and it has taken time for us and Agiliance to fully develop this functionality."

Walton thinks two related trends are conspiring to make having a robust GRC strategy and software implementation more of a necessity for many companies.

"First, we seem to be in an era of re-regulation, and every new regulation brings new compliance obligations," he says. "Second, contract and vendor-management processes are being used more frequently to shift the onus of compliance obligations onto vendors."

From a vendor's perspective, sometimes there is a business reason to consider accepting contract provisions from a prospective client that create unusual or incremental risk. "We believe that the better we understand our existing risk profile, the more intelligently we can evaluate nonstandard client terms," Walton says.

"When we do agree to unusual requests, we also need the capability to monitor our own compliance. This is a huge advantage of our RiskVision implementation. It allows us to accept risks that would be unthinkable if we were flying blind."

Like a number of industry experts, Walton thinks it's important to remember that GRC is a process supported by technology, and companies should avoid focusing only on the software.

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