The frequency of risk occurrences continues to accelerate as the negative impacts of failure increase in severity. The old methods and practices of performing governance, risk and compliance (GRC), which revolve around manual processes, endless spreadsheets and retroactive identification, are too outdated to keep pace with the rapid evolution of technology. As a result, businesses have taken risk management into the digital age, morphing GRC into digital risk management (DRM). Those leveraging DRM make better security decisions, safeguard customer data and ensure stakeholder satisfaction. The implementation of DRM also leads to greater efficiency via automation.

However, despite these innovations, many organizations miss one vital component of DRM namely, compliance as a code. Coined by experts at the world’s largest manufacturer of custom software, compliance as a code refers to the inclusion of risk management and compliance within the entire software development cycle (SDLC). Currently, DRM is typically added retroactively to the SDLC, and while it’s not necessarily because businesses view risk as an afterthought, it’s primarily because this is just standard practice.

But, by using the compliance-as-a-code methodology and implementing DRM from the start and throughout the SDLC, companies can further reduce costs and save time, among other benefits. It is very important to remember that as you go through digital transformation, you change your risk footprint every time.

The Benefits of DRM

When an organization switches to DRM, it completely changes its strategic orientation and focus, bringing about transformational advantages. From advanced decision-making and automation capabilities to increased efficiency and enhanced competitiveness. DRM is the next evolution of GRC, allowing companies to begin the processes of virtualization and digitization. The former is critical to minimizing governance fatigue, and the latter is central to investigating issues. With digitization, one can leave behind an easily trackable trail for risk analysts to resolve minor problems quickly or seamlessly escalate significant ones. Data-centric risk investigation enables risk experts and service providers to collaborate more effectively.

Furthermore, the inclusion of DRM permits businesses to deploy more intelligence automation (IA), which is essential to modern cybersecurity as it can identify risks businesses might not have known. And without automation, companies would need to hire an army of professionals. Also, with new regulations from FTC in USA and DORA in Europe, we see requirements to include cybersecurity as part of your SDLC cycle.

Challenges and Considerations of DRM

Nevertheless, despite these invaluable benefits, DRM does not come without its challenges and concerns, especially in the later stages of the SDLC. Organizations must be careful because as they keep adding new technology to their portfolio and continue automating more processes, they could unintentionally create new security vulnerabilities. And while adopting DRM methodologies can quicken maturity and growth, businesses must also be prepared to invent new roles, hire new employees and train all relevant personnel adequately. Likewise, transitioning from GRC to DRM requires significant effort and monetary cost (still, the future cost avoidance of DRM will ultimately pay for itself).

Often, it is best for companies to partner with an experienced DRM vendor, someone who understands how small changes can have rippling impacts. Usually, this partner can help an organization craft a DRM strategy and a coinciding roadmap that addresses specific business risks and needs. Moreover, it is critical that businesses, whether they choose a partner or not, set up their DRM strategy so that it doesn’t come at the end of the SDLC but throughout. 

The Six Phases of the SDLC

The SDLC describes the basic design course businesses follow when developing new software; it is critical to understand the different stages and why risk management, compliance and governance need to be added to the whole process. During the first phase or the planning stage, companies must identify potential risks to minimize operational disruptions. Then comes the requirements analysis stage, where businesses collect and analyze various design requirements for each software feature. The next stage is the design and prototyping stage, where the plans that the architects create allow the business to identify key technologies and toolsets required for the eventual development of the product. Afterward, the actual software development begins.

The second to last phase is the software testing stage, by which quality assurance attempts to spot any defects or bugs in the software with compliance as a code, this crucial testing isn’t limited to a single stage but the entire SDLC. Finally at the deployment and maintenance stage the business releases the product to the market. Topically, this is another stage where software defects are remediated. However, by leveraging compliance as a code, organizations can eliminate the problem of adding DRM retroactively, which often extends and delays the SDLC.

Implementing Compliance as a Code

Building DRM mitigation and occurrences processes into new initiatives from the beginning of the SDLC enables companies to reduce the cost of risk management, which also truncates the time between risk occurrence and remediation. Moreover, integrating GRC items into the SDLC from the beginning enables organizations to avoid including those items after the development is complete, which is usually arduous and time-consuming.

Risk assessment becomes second nature when companies ingrain DRM into the entire SDLC process instead of just a select few stages. There is tremendous peace of mind in robust risk anticipation with mitigation procedures while developing software. Engineers and architects won’t constantly look over their figurative shoulder, wondering if they messed up earlier in the SDLC. And when considering the ever-evolving and intensifying risk landscape, organizations must have a well-constructed DRM strategy that encompasses all the areas of risk, compliance and governance within the full SDLC.  

Putting People at the Center of DRM 

While DRM deployment is often associated with processes and technologies, it is also most importantly a shared responsibility of all those involved in the planning and development of the product. Those employees who will be most affected by digitization need to be ready for the company’s evolution from GRC to DRM otherwise, they’ll be left behind.

Similarly, businesses need to ensure risk management isn’t so intrusive that it inhibits innovation and erodes trust. In the same way, customers are equally as important stakeholders. Ultimately, since the business’s users use their products and software, risk needs to be a key factor in the customer journey and experience.