The Tribune

Governance, risk and compliance (GRC) functions are undergoing significant changes, driven by rapid technological advances and increasingly stringent regulatory demands. Companies must adapt to this evolving landscape to remain competitive and compliant. Emerging technologies such as artificial intelligence (AI) are at the forefront of these transformations, offering both opportunities and challenges.

The evolution of AI and governance, risk and compliance automation; the transformation of risk management practices; the convergence of security, compliance and privacy; and the refinement of third-party risk management are all issues that this article seeks to address.

AI and automation in GRC

AI is revolutionising GRC by automating tasks and improving decision-making. In 2025, AI will enhance critical GRC activities such as:

1. Risk Assessments: Advanced AI models will allow companies to quantify risks more accurately, reducing reliance on subjective evaluations. By analysing historical data and predicting likely outcomes, AI can enable proactive risk management, focusing on high priority areas.

2. Evidence Collection and Audits: AI-driven tools will automate evidence gathering, control testing and compliance reporting. These tools will reduce manual workload and streamline audit preparation. Continuous monitoring powered by AI will enable real time compliance insights, fostering a more agile approach to regulatory changes.

Despite these advances, ethical concerns about AI - including bias, accountability and transparency - remain. Human oversight is essential to address these challenges effectively.

Transforming risk management practices

Risk management strategies are also evolving. Companies are moving toward more precise, data-driven approaches:

* Quantitative Risk Analysis: Companies are increasingly using data to evaluate and prioritise risks. This approach incorporates business context and external factors, such as geopolitical events and economic indicators, for a comprehensive understanding of risk.

* Dynamic Risk Adjustment: Real-time data will enable companies to adapt their risk strategies quickly, aligning with changing conditions and emerging threats.

Balancing risk mitigation with innovation is a critical challenge. Companies must decide how to allocate resources between minimising risks and pursuing growth opportunities.

The convergence of security, compliance and privacy

The integration of security, compliance and privacy functions is becoming more critical. These disciplines share the goal of reducing risk and ensuring trust. Companies are breaking down silos to create cohesive strategies that address threats, meet regulatory requirements and uphold customer expectations.

This shift requires investments in technology, processes and workforce training. Additionally, collaboration across teams is essential for achieving a unified approach to GRC.

Redefining third-party risk management

Third-party relationships pose unique risks, especially in a globalised economy. AI tools are streamlining vendor risk assessments, reducing response times for due diligence questionnaires, and enabling real-time monitoring of third-party risks. These innovations improve trust and transparency between companies and their partners.

Preparing for the future

The future of GRC lies in embracing technology and fostering a culture of continuous adaptation. Companies must:

* Invest in AI and automation tools to streamline processes and improve accuracy.

* Upskill their workforce to handle new technologies and address emerging risks.

* Develop strategies to integrate security, compliance and privacy into a cohesive framework.

As the GRC landscape evolves, businesses that proactively adapt to these changes will be better positioned to navigate challenges and capitalise on opportunities. By leveraging technology and fostering collaboration, companies can build resilient, forward-thinking GRC programmes that meet the demands of 2025 and beyond.

• NB: About Derek Smith Jr

Derek Smith Jr. has been a governance, risk and compliance professional for more than 20 years with a leadership, innovation and mentorship record. He is the author of ‘The Compliance Blueprint’. Mr Smith is a certified anti-money laundering specialist (CAMS) and the assistant vice-president, compliance and money laundering reporting officer for CG Atlantic’s family of companies (member of Coralisle Group Ltd) for The Bahamas, St Vincent & The Grenadines, St Lucia and Curaçao.