Return on investment (ROI) is a key performance indicator of any initiative taken by a company. Measuring the return on investment is extremely useful while making business decisions. Estimating and measuring ROI is not optional but imperative for a company.
Implementing a well-integrated GRC platform is a necessity and a priority among many organizations now. Organizations have realized the importance of GRC to support their growth and sustenance operations. But for a leadership board to continue with the plan, a detailed cost versus benefits analysis is necessary. Both tangible and intangible benefits have to be considered while quantifying the ROI. Another significant aspect to be kept in mind is that GRC solutions help in reducing an organization’s risk and increase security over a period of time. They may not show immediate performance results.
The metrics used for calculation may include both financial and operational metrics. Financial metrics include- people, processes and technology. Operational metrics include- effectiveness due to the reduction in risks, decrease in audit time and increase in compliance. Below are some of the metrics described in detail-
1. Change in the time required for carrying out activities (Time)- The leadership should make a note of the time taken to complete an activity before and after implementing GRC. This is an indicator of efficiency. A decrease in time post GRC implementation indicates an increase in efficiency. The extra time can be used by employees to focus on other tasks.
2. Decrease in duplication of efforts (Efforts)- Due to the centralization of activities, duplication of efforts would be highly reduced. The change in the duplication should be recorded as it is an indicator of the effectiveness
3. Decrease in risk (Cost)- A database of risk information can be stored in a GRC platform to get a comprehensive view of risks in various areas. Reduction in risks can lead to cost reduction.
4. Improvement in overall performance due to integration(Growth)- Overall growth supported by GRC integration should be measured.
The above metrics constitute both tangible and intangible benefits of GRC. By estimating the current and further costs and benefits, the expected ROI can be calculated to measure results.
Boosting the ROI for GRC implementation can be done by clearly evaluating the ROI in the six key components of GRC lifecycle like- vision and strategy, frameworks, process management, people, vendor selection, technology enhancement. Analytics can be used to identify the various gaps in implementing GRC.
On a concluding note, it is not only essential to implement GRC but it is equally important to build a strong use case to reap better ROI. But determining the ROI, in this case, maybe slightly complicated and challenging as it involves many intangible benefits. But, by clearly defining the operational and financial metrics and taking intangible benefits into consideration, a quantifiable ROI value can be determined. This can be used to identify gaps and amplify the benefits of GRC. In the long run, benefits of GRC will undoubtedly outweigh the investment.Add to favorites