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Companies around the globe face an unprecedented level of risk in 2025 — from ransomware, network outages, and fines. Cyberattacks have increased, causing more than 3,000 data breaches annually. Fortunately, today’s organizations also have powerful risk management frameworks to successfully weather dangers and take advantage of opportunities. Two leading RMFs are enterprise risk management and Governance, Risk, and Compliance. Which is the best option for your business: ERM or GRC?
Even though ERM and GRC are both popular, they have different priorities, objectives, and approaches. Choosing an RMF that fits your organization’s goals and operations is critical for success. Making the right decision can help you minimize costs, reduce overall risks, improve your results, and maximize organizational efficiency.
Comparing ERM vs. GRC doesn’t have a simple answer. Factors like the size of your organization and your industry come into play. To help you make a smart decision, it’s important to understand the differences and advantages of each framework.
Enterprise risk management is an organization-wide approach to risk. The goal of ERM is to approach every aspect of the risk management process as a company instead of as individual departments. This includes identifying threats, mitigating them, and designing effective solutions from the top down.
The ERM framework came about as an improvement over traditional risk models. Originally, RMFs assigned the responsibility for mitigating risk to each department head. Unfortunately, this often leads to information silos, redundant efforts, and confusion. Large-scale threats can slip through the cracks, such as mobile device vulnerabilities.
ERM solves these problems with a unified approach to risks and vulnerabilities. Instead of five decision-makers and a tangled mess of procedures, you deal with risks at the same time and in the same way across your organization.
Governance, Risk, and Compliance is a risk framework that seeks to balance organizational risks, business objectives, government regulations, and industry requirements. In the past, it was mainly global brands and large enterprises that needed to worry about compliance issues. These days, even small-to-medium businesses in many industries have to think about complying with PCC DSS, HIPAA, SOC 2, GDPR, and other frameworks.
Put simply, GRC recognizes that compliance can be a vital element in risk management. For companies doing business in Europe, GDPR violations can have an enormous cost — and those financial impacts are risks in their own right. In 2023, Meta faced a massive fine of €1.2 billion for breaking GDPR by transferring data on private citizens from the EU to the United States.
This doesn’t mean that compliance overshadows the governance and risk mitigation aspects of GRC. Instead, it strengthens them. At least as far as data security is concerned, industry compliance requirements represent cybersecurity best practices. Following SOC 2, NIST CSF, or ISO 27001 standards can increase your organization’s defenses against ransomware attacks, breaches, and data loss by leaps and bounds.
One area of common ground between ERM and GRC is the need to assess risks on an organizational level. While the type and priority of risks are usually different, the process of identifying risks is similar:
These steps are the same regardless of your business’s size. The scale and complexity of risk management change for enterprises, but cybersecurity vulnerabilities are just as devastating for small business owners.
Keep in mind that modern approaches to risk management have blurred the lines between ERM and GRC. Many enterprises use a hybrid version of GRC that relies on ERM principles to avoid data silos.
Smaller healthcare, retail, manufacturing, and financial businesses may start with ERM but gradually include compliance frameworks as they work toward industry certifications. The final result looks more like ERM-C.
To help your organization decide whether to build off an ERM or GRC foundation, you need to have a clear picture of the main advantages of each model.
ERM frameworks offer a broader view of organizational risks and allow for a wider range of solutions. Where GRC often mandates specific actions, ERM gives your company more freedom to choose the ideal response to individual risks, such as:
With ERM, the main criteria for evaluating risks is how they affect your company’s objectives. Certain levels of risk are acceptable or even desirable if they deliver a favorable return on investment. GRC doesn’t allow such leeway because strict compliance is paramount.
The GRC framework lives and breathes compliance. This can give your organization a serious edge when pursuing valuable certifications such as SOC 2 and ISO 27001.
Meeting information security requirements can help your business win lucrative government contracts. GDPR compliance is non-negotiable for businesses wanting to expand into European markets.
Also, a large number of B2B organizations expect suppliers and vendors to have ISO certification. ERM can get you started, but the top-down policies that come with GRC are a must for many cybersecurity frameworks.
The specifics depend on your organization and industry, but in general, GRC requires more resources and costs more to implement. You may need different executives to manage the governance, risk, and compliance aspects of your framework. ERM is usually easier for small and medium-sized businesses, with compliance policies added as needed.
The more departments and employees your business has, the more you need clear policies, procedures, and guidelines for successful risk management. GRC is often the framework of choice for enterprise organizations, while ERM is more popular for small businesses.
That said, before making a decision on ERM vs. GRC, you need to consider industry trends and client expectations. At Compyl, we’re happy to help you evaluate your needs and implement risk frameworks cost-effectively. Learn more today.
