The board's role in leading and enabling GRC
The days of simple business operations are long behind us. Today’s organizations face rapid growth, evolving risks, shifting regulations, globalization, and a flood of technology and data. For a GRC board, keeping strategy, performance, and risk aligned amid all this complexity is no small feat.
The board's role in GRC has never been more critical — helping executives and management teams navigate uncertainty and stay in sync with constant change.
GRC (governance, risk management and compliance) by definition starts with the G for governance. Because of the board's role in corporate governance, one would think that GRC is a board-driven strategy and initiative. However, the opposite is most often the case. It is the R for risk management and C for compliance that drive most GRC initiatives — and fail to engage senior executives and the board who ultimately have fiduciary obligations for all aspects of GRC.
This article explores how boards can lead effective GRC strategies by covering:
- What the board's role in GRC encompasses and why board leadership matters
- How governance, risk management and compliance interconnect at the board level
- The shortcomings of siloed, department-led GRC approaches
- The benefits of board-driven, integrated GRC strategies
- How boards enable organization-wide GRC excellence
- How AI-powered platforms transform board-level GRC oversight
What is the board's role in GRC?
The board's role in GRC encompasses setting strategic direction, approving risk appetite, ensuring adequate resources and holding management accountable for GRC performance across the enterprise.
Boards hold ultimate accountability for governance, risk management and compliance — a responsibility that cannot be delegated despite operational execution residing with management.
This accountability has intensified as regulatory scrutiny increases and stakeholders demand greater transparency. According to What Directors Think 2025 research conducted by Corporate Board Member, FTI Consulting and Diligent Institute, strategy has emerged as the most challenging issue for directors to oversee at 42%, surpassing cybersecurity for the first time in years.
Additionally, 24% of directors identify enterprise risk management as a significant oversight challenge, reflecting the complexity boards face in connecting GRC activities to strategic objectives.
The board's role now extends beyond reviewing periodic reports to actively shaping how organizations approach governance, risk and compliance as interconnected disciplines.
Effective boards establish clear expectations for the information they need, create accountability structures that ensure management execution, and continuously evaluate whether GRC investments deliver value in proportion to the resources consumed.
Setting strategic direction for GRC programs
Boards define the governance framework that shapes how organizations make decisions, allocate resources and hold leadership accountable. This includes:
- Approving risk appetite statements that clarify acceptable risk-taking parameters
- Establishing governance structures that align with business strategy
- Ensuring compliance programs reflect organizational values and stakeholder commitments
Strategic direction requires boards to understand how GRC activities support business objectives rather than viewing governance, risk and compliance as separate compliance exercises.
Understanding GRC in context
GRC, as detailed in the OCEG GRC Capability Model, drives principled performance. It represents an organization's capability to reliably achieve objectives (governance), while addressing uncertainty (risk management) and acting with integrity (compliance). The flow starts with governance, which provides context for risk management and compliance.
Governance: Reliably achieve objectives
This is the governance function of GRC — to set, direct and govern the reliable achievement of objectives. Objectives can be overall entity-level objectives, but also can be divisional, departmental, project, process or even asset-level objectives.
Governance involves directing and steering the organization to reliably achieve objectives.
Risk management: Address uncertainty
This is the risk management function of GRC. ISO 31000 defines risk as "the effect of uncertainty on objectives." Good risk management is done in the context of achieving objectives — to optimize risk-taking to ensure that the organization creates value.
Compliance: Act with integrity
This is the compliance function of GRC. It extends beyond regulatory compliance to encompass the organization's adherence and integrity in meeting its commitments and obligations.
These commitments and obligations can stem from regulations, but also can be found in ethical statements, values, codes of conduct, ESG commitments and contracts.
As you can see, GRC by definition and concept flows from governance into risk management and compliance. However, most organizations implement GRC strategies that start with risk and compliance and fail to connect or even consider governance. Boards have both the responsibility and authority to correct this fundamental misalignment.
The shortcomings of a siloed approach to GRC
"There needs to be collaboration between risk and the business, vertically up and down, but then also horizontally across the organization. It is absolutely essential — collaboration across risk departments. The problem is that there are silos. Risk and audit are interconnected and interdependent. Collaboration helps provide audit's perspective, their insight across company policies and procedures that help improve risk's function," says Michael Rasmussen, CEO of GRC Report.
Rasmussen identifies the fundamental challenge facing most organizations: GRC functions operate in isolation when they should work as an integrated system. When risk management, audit and compliance teams maintain separate processes and reporting structures, organizations lose the critical connections between these disciplines.
A compliance issue may signal broader risk exposures, while an audit finding may reveal governance gaps that affect strategic decision-making. These relationships remain invisible when teams work in departmental silos.
This interconnectedness and demand for contextual awareness apply to the world of business. Organizations need contextual awareness of GRC to understand the intricate relationships among objectives, risks and integrity across the enterprise.
Without this integrated view, boards cannot effectively oversee how governance decisions impact risk exposure, how compliance obligations constrain strategic options or how risk-taking aligns with approved objectives.
The core issue is that in GRC, the ‘G’ often goes silent. Too frequently, organizations approach GRC from a compliance, audit or risk perspective, leaving governance buried deep within departments instead of driving a top-down, board-led strategy.
True GRC should be an integrated discipline that connects governance with performance and decision-making at the highest level.
Organizations need to understand how to monitor risk-taking in the context of governance and objectives, measure whether associated risks taken are the right risks to achieve objectives, and review whether risks are effectively managed.
The benefits of a board-driven, integrated approach to GRC
Organizations that take a board-driven approach to GRC led from the top realize significant advantages in organizational performance, risk management effectiveness and compliance maturity.
These benefits extend beyond avoiding regulatory penalties to creating competitive advantages through superior governance infrastructure.
When boards actively lead GRC strategies, organizations become:
- More aware: Leaders have a finger on the pulse of the business and watch for changes in internal and external environments that introduce risk to objectives. Key to this is the ability to turn data into information that can be analyzed and shared in every relevant direction.
Boards need synthesized intelligence that highlights significant exposures, emerging threats and risk appetite alignment — not raw data dumps from operational departments.
- More aligned: They align performance, risk management and compliance to support and inform business objectives. This requires continuously aligning objectives and operations of the integrated GRC capability to those of the entity, and giving strategic consideration to information from GRC management capabilities to effect appropriate change.
The What Directors Think 2025 report reveals that only 30% of directors rate their board's ability to understand the company's long-term strategy as "excellent," evidencing the challenge with maintaining this alignment.
- More responsive: Organizations cannot react to something they do not sense. Mature GRC management focuses on gaining greater awareness and understanding of information that drives decisions and actions, improves transparency, and quickly cuts through the morass of data to uncover what an organization needs to know to make the right decisions.
- More agile: Stakeholders and the board require the organization to be more than fast — they need it to be nimble. Being fast isn't helpful if the organization is headed in the wrong direction. GRC enables decisions and actions that are quick, coordinated and well thought-out.
Agility allows an entity to use GRC to its advantage, grasp strategic opportunities and be confident in its ability to stay on course.
- More resilient: The best-laid plans fail. Organizations need to be able to bounce back quickly from changes in context and risks with limited business impact. They need sufficient tolerances to allow for some missteps and have the confidence necessary to adapt and respond to opportunities rapidly.
"Resilience is key," says Lisa Bougie, speaker at Diligent Institute's Elevate Leadership Summit. "To build resilience, an organization needs to both acknowledge known risks and appreciate the reality of uncertainty. Scenario planning can help to ensure an organization is as prepared as possible when the unexpected hits."
- More efficient: They build business muscle and trim unnecessary expense from duplication, redundancy and misallocation of resources — making the organization leaner overall with enhanced GRC capability and related decisions about resource application.
Enhance your GRC integration
Discover how modern platforms unify governance, risk and compliance oversight for board-level decision making.
Read the guideHow boards can enable organization-wide GRC excellence
Beyond setting strategic direction, boards must create organizational conditions that enable effective GRC execution.
This requires establishing governance structures, allocating resources appropriately, ensuring management accountability and continuously evaluating program effectiveness.
Establish clear governance structures
Boards should define explicit accountability for governance, risk management and compliance activities across the organization. This includes clarifying:
- Which executives own specific GRC domains
- How cross-functional coordination occurs
- What escalation paths exist for significant issues
- How information flows from operational activities to board oversight
Effective governance structures also address committee responsibilities. Many boards are reevaluating committee structures to ensure they don't overburden audit committees with expanding GRC responsibilities.
Diligent’s 2025 Risk and Opportunity Outlook report emphasizes that "the winners will be the companies that recognize that risk and opportunities need to be standing discussion topics on the board agenda. Think about changing your committee structure to reflect this — and make sure that you aren't throwing everything under the Audit Committee's purview."
Ensure adequate capabilities and technology
Organizations need appropriate GRC technology platforms that provide boards with real-time visibility into risk exposure and compliance status.
The What Directors Think 2025 survey reveals that 37% of directors believe implementing new tools and technology at the board level would help modern boards function better, ranking third among all potential improvements.
"Tell the board what they need to know, not what you know," says David Platt, Chief Strategic Development Officer at Moody's.
This principle recognizes that boards need synthesized intelligence delivered through technology platforms that aggregate data from across the enterprise and present actionable insights rather than overwhelming detail about departmental activities.
Create feedback loops for continuous improvement
Board-driven GRC requires mechanisms for learning from incidents, near-misses and changing conditions.
Organizations should establish processes for capturing lessons learned, updating risk assessments based on new information, and adjusting governance structures as business strategy evolves.
"2025 is the year we put the 'G' back in ESG," notes Pav Gill, CEO of Confide. "The strongest defense against emerging risks lies in sound, well-structured governance systems."
The takeaway? Governance infrastructure creates the foundation for effective risk management and compliance — not the reverse.
Foster board-management collaboration
Effective GRC requires partnership between boards and management rather than adversarial oversight relationships. Boards should create environments where management feels comfortable escalating emerging risks, admitting uncertainties and requesting resources for capability development.
The What Directors Think survey reveals shifting board information needs. Beyond the CEO and CFO, 35% of directors want to hear more from the Chief Human Resources Officer, 31% from the Chief Marketing Officer, and 24% from the Chief Technology Officer.
This diversification of board-management dialogue reflects the expanding scope of GRC oversight beyond traditional financial and legal domains.
How AI-powered platforms transform board-level GRC oversight
For boards navigating today's complex GRC landscape, AI-powered governance platforms provide the integrated visibility and intelligence needed to fulfill oversight responsibilities effectively.
These solutions address the fundamental challenge where most organizations maintain siloed GRC and finance systems, preventing comprehensive risk visibility.
Unified GRC visibility for strategic oversight
The Diligent One Platform delivers comprehensive GRC capabilities that integrate board management, enterprise risk management, compliance tracking and audit activities in a single unified interface.
This consolidation enables boards to see how governance decisions impact risk exposure, how compliance obligations constrain strategic options and how risk-taking aligns with approved objectives.
The platform's board-ready reporting templates synthesize data from across the enterprise into actionable intelligence.
AI-powered analytics identify significant patterns, emerging threats and risk appetite deviations that require board attention, rather than overwhelming directors with operational detail.
AI-enhanced board meeting preparation and decision support
Diligent Boards transforms board engagement with GRC oversight through AI-powered preparation capabilities. Smart Risk Scanner automatically identifies risky language and legal red flags in board materials before meetings, while Smart Prep Insights generates pointed questions by topic with supporting citations.
Additionally, Smart Builder reduces board preparation time, eliminating manual compilation burden and enabling boards to focus meeting time on substantive GRC discussions.
Enterprise risk intelligence with predictive capabilities
For organizations requiring sophisticated risk management, Diligent ERM provides comprehensive risk orchestration across business units and geographies.
The platform's AI-powered risk identification benchmarks organizational risks against 180,000+ real-world risks from SEC 10-K reports, while integration with Moody's Risk Benchmarking Data delivers external risk intelligence and credit sentiment scores.
This combination enables board-level discussions grounded in both organizational context and industry standards.
Together, these solutions provide the integrated platform capabilities that enterprise organizations need to mature from reactive, department-led GRC to proactive, board-driven governance.
Ready to strengthen your board-level GRC oversight with AI-powered intelligence? Schedule a demo to see how Diligent transforms governance, risk and compliance oversight.
FAQs about the board’s role in GRC
What does GRC stand for and why does it matter to boards?
GRC stands for governance, risk and compliance — an integrated approach to organizational oversight that connects how companies achieve objectives (governance), address uncertainty (risk management) and act with integrity (compliance).
It matters to boards because they hold ultimate accountability for all three elements and cannot effectively oversee them in isolation.
How should boards structure GRC oversight across committees?
Boards should evaluate whether their current committee structure appropriately distributes GRC responsibilities or overburdens specific committees — particularly audit committees — with expanding oversight obligations.
Consider creating risk committees for organizations with significant risk exposures and establishing protocols for cross-committee coordination on issues spanning multiple domains.
What information do boards need to oversee GRC effectively?
Boards need synthesized intelligence rather than operational data dumps.
Essential information includes:
- Risk dashboards highlighting significant exposures and risk appetite alignment
- Compliance status reports identifying gaps and remediation progress
- Operational resilience metrics demonstrating the capacity to withstand disruptions
- Third-party risk assessments providing visibility into vendor compliance and cybersecurity posture.
What role should boards play in AI governance?
Boards must establish AI governance frameworks defining acceptable use cases, risk tolerances for AI deployment and mechanisms for monitoring AI system performance.
This requires board-level understanding of AI capabilities and limitations rather than complete delegation to technology departments.
Schedule a demo to see how integrated platforms enable the board-led oversight approach that delivers superior results.
