Organizations are discovering that these three factors are more linked to each other than previously thought or perceived.Risk and compliance management have always been important tenets of the financial industry, and recently sustainability management has also increased in importance. These three things have been kept separate in almost every organization. Enterprise risk management and compliance may have some overlap, but sustainability is usually a completely different department, one which does not interact much with risk management or compliance. However, organizations are starting to realize that they may be exacerbating their problems by running three different systems, when the real solution is to run one system that handles everything.

The link between risk management, compliance, and sustainability

It is easy to see why risk management and compliance management are so deeply intertwined. Compliance management is a crucial part of enterprise risk management. Enterprise risk management is impossible without compliance management, especially when it comes to organizations working in the financial industry. However, companies are realizing that managing sustainability has many parallels to risk and compliance, and are starting to create new hierarchies where risk and sustainability are handled by the same department.

Sustainability intersects both risk and compliance

Sustainability is interesting because it is still a nascent factor compared to risk and compliance. Sustainability management is something organizations have only been seriously considering only for a decade or two, while risk and compliance have enjoyed importance for more than half a century. What is interesting about sustainability is that it involves both risk and compliance. Organizations are realizing how scarce natural resources are, and that they need to do a better job of ensuring they operate in a manner that is sustainable for the environment. While sustainability is currently something many organizations are doing voluntarily, the future promises to be very different. Sustainability will soon become an important way of managing risk, as well as a necessary function of compliance management.

How enterprise risk management and sustainability will merge in the future

We have already started to see the effects of climate change around us. The weather is more extreme, certain areas are becoming unsuitable for business, and these problems will only grow bigger. This means that sustainability will become a crucial way of managing enterprise risk management. Companies will have to ensure they are managing sustainability not just because they care about the environment, but because it will be necessary for their business to function.

How compliance management and sustainability will merge in the future

The merger between compliance management and sustainability management will be even more direct. The writing is on the wall already – some of the biggest organizations in the world are using sustainability management solutions because they know that in the future many of the regulations they have to comply with will be related to the sustainability. As the effects of climate change become more pronounced people will become more concerned about the environment, which in turn means the government will become more focused on the environment. Sustainability may end up becoming a hotbed of new regulations, which means that compliance will deal with much more sustainability issues in the future.

The Simple Solution

While this may seem like a problem, because of how much change organizations will have to go through, in reality there is a simple solution – to use one GRC solution to manage everything. Governance, risk, and compliance solutions now incorporate sustainability management, allowing everything to be managed within one system. Such a system for risk management, compliance management, and sustainability management allows organizations to ensure that all three of these factors are being managed properly. Since GRC solutions allow organizations to map relationships between factors, they are already ready for a business world where risk, compliance, and sustainability fall under one umbrella. In such a GRC solution if there is a problem in sustainability management, it will be reflected in the risk report as well as the compliance report. This means that all three of these factors can be managed by the same team, resulting in a more robust and efficient organizational approach towards all three factors. If you are looking for a GRC solution aimed at small to mid-sized organizations, then see what Predict360 can do for your organization by requesting a live demo, or try the solution yourself with a 30-day free trial.

About the company

360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence. Remain up-to-date on industry news/updates through our Twitter & Linkedin profiles.