On January 29, NAVEX is hosting the Top 10 Trends in Risk and Compliance webinar. This post is a preview of two of the topics covered in the eBook and webinar: the rise of AI and the continued focus on cybersecurity and business resiliency.
Artificial Intelligence (AI), cybersecurity and risk assessments are critical components of effective governance, risk management and compliance (GRC) strategies. But despite the strategic importance of managing these areas of risk, many organizations are stymied with where to start.
The dual-edged sword of AI
AI technologies, especially Generative AI (genAI), are revolutionizing operations, from supply chains to customer engagement. According to the 2024 NAVEX State of Risk and Compliance Report, over half of organizations plan to adopt genAI within the year, chasing its potential for boosting efficiency and revenue.
However, rapid adoption brings many compliance challenges, including data privacy concerns, algorithmic bias and regulatory violations, just to name a few. From the EU AI Act to New York City’s AI bias audits, businesses face escalating pressure to align with emerging legal frameworks. Non-compliance isn’t just a slap on the wrist – it’s a financial and reputational time bomb.
Why risk assessment is the foundation of AI compliance
Risk assessment acts as the compass guiding organizations through these turbulent regulatory waters. But its value lies in more than just meeting legal obligations. A robust risk assessment framework:
- Identifies vulnerabilities: Pinpoints weak spots in AI systems, from cybersecurity gaps to biased data inputs
- Mitigates legal exposure: Prepares companies to comply with regulations like Canada’s Artificial Intelligence and Data Act (AIDA) and the EU AI Act
- Supports ethical AI use: Ensures algorithms align with corporate values, fostering trust among customers and stakeholders
Despite the many benefits of risk assessments, many organizations neglect to prioritize or fully realize the importance of this critical process, treating it as a checklist rather than a strategic tool.
Preparing for the future of AI governance
As regulatory trends evolve, proactive GRC programs are essential to keep pace with change. Here’s how organizations can strengthen their risk assessment efforts:
- Establish apparent oversight: Create enterprise-wide councils to oversee AI governance and ensure department accountability
- Adopt automation tools: Use AI-powered systems to streamline data analysis, making risk assessment more efficient and accurate
- Invest in education: Equip teams with the knowledge to effectively navigate AI-related risks and emerging regulations
AI holds immense promise, but it’s not without peril. By embedding robust risk assessment into your GRC strategy, you’ll safeguard your organization against unforeseen pitfalls and position yourself as a leader in responsible innovation.
As always, taking a proactive approach will pay dividends – in this case, your compliance future depends on it.
The evolving landscape of risk assessment and business resiliency: A reality check
2024 was a year of wake-up calls for many organizations, with significant cybersecurity incidents shaking the foundations of businesses worldwide. The combination of cyber threats, supply chain vulnerabilities and emerging technologies is a storm that organizations can no longer ignore.
Yet, as companies scramble to protect themselves, two critical concepts – risk assessment and business resiliency plans – remain some of the most misunderstood and underutilized components of a comprehensive GRC program.
Risk assessment: The backbone of effective GRC programs
The importance of risk assessment for your GRC program cannot be overstated. They are not just a regulatory checkbox, they are vital tools for identifying where your organization’s resources should be focused. Without a robust risk assessment process, you’re flying blind and facing regulatory pressures, operational risks and compliance challenges. Every organization should have a clear, ongoing risk assessment initiative to identify and mitigate compliance risks before they escalate. However, the reality is far murkier.
Why is risk assessment so crucial yet so often mishandled? The root cause lies in a profound misunderstanding of its scope and purpose. Many organizations treat risk assessments as a one-time activity – then file them away, check the box and forget about them until the next audit rolls around. However, this approach is both antiquated and dangerous. A good risk assessment is a dynamic, ongoing process, evolving alongside new risks like cybersecurity threats, regulatory changes and shifts in the global landscape.
Risk assessments aren’t just about identifying compliance risks, they’re integral to identifying operational risks that could cripple your business. Take, for instance, the catastrophic ransomware attack in February 2024 that crippled pharmacies and hospitals across the U.S. The breach exposed millions of individuals’ private data but also brought business operations to a screeching halt. This wasn’t just a compliance failure – it was an operational failure. This blending of compliance and operational risk is the new normal.
The problem? Many organizations still treat these as two separate domains. However, with cyber threats spilling over into operational risks, compliance officers, IT teams and senior management must work together to navigate their complexities to ensure the business is resilient enough to withstand emerging, multifaceted risks.
Business resiliency: The cornerstone of modern risk management
Establishing practices to ensure business resiliency is your most valuable asset for surviving and thriving in the current threat landscape. Organizations must prioritize business continuity to prepare from myriad disruptions so they can bounce back – whether cyber-related or from unforeseen supply chain issues, and much more. In 2024, cyber threats increasingly targeted not just IT systems, but the entire supply chain, creating a ripple effect of operational chaos.
Consider the ransomware attack mentioned earlier, or the botched software update in July from a major IT software provider. Both incidents disrupted entire industries – airlines grounded flights, emergency services went offline and logistics companies couldn’t deliver goods. In these cases, the damage wasn’t just regulatory but operational, financial and reputational. Cybersecurity isn’t just a matter of compliance anymore – it’s a matter of staying in business.
The key to weathering such storms is business continuity planning – and, more importantly, ongoing testing and refinement of that plan. To be resilient, businesses must proactively assess third-party risks, ensure supply chains are secure and regularly test disaster recovery protocols. The CISO, the compliance officer and senior management must be in lockstep, working together to develop a comprehensive strategy to withstand cyber-attacks and other disruptions.
The path forward: Combining risk assessment and business resiliency
So, how can organizations turn the tide and better prepare for the new era of cyber threats and supply chain disruptions?
- Map your critical assets: Knowing where your most sensitive information lives and understanding your essential IT assets will help you identify both compliance and operational risks. This process allows you to anticipate potential attack vectors, making it easier to implement appropriate cybersecurity measures.
- Strengthen third-party risk management: As the lines blur between compliance failures and operational disruptions, conducting thorough cybersecurity risk assessments of third-party vendors is crucial. This may involve requiring SOC audits for technology partners or performing direct testing and monitoring critical suppliers.
- Enhance supply chain management: Businesses must understand their supply chain to assess risks effectively. Procurement teams must develop more substantial contract management processes, ensuring third-party agreements include risk assessment and cybersecurity testing clauses.
- Test and train relentlessly: Cybersecurity failures are inevitable. Where the rubber really meets the road is how prepared your business is to respond to them. Ensure senior executives and staff regularly participate in tabletop exercises, simulating real-world scenarios, to prepare operations so they can quickly resume during a cyber-attack or supply chain failure.
- Improve alerting and reporting: In an age of constant threats, businesses are often challenged in identifying potential risks and knowing when and how to escalate issues to the right teams. CISOs and compliance officers must ensure their teams have strong escalation protocols and comprehensive reporting capabilities to brief senior leadership on the organization’s cybersecurity posture.
2025 Top 10 Trends in Risk and Compliance webinar and eBook
Register for January 29, 2025, webinar to hear expert insights into the trends and receive early access to the complete 2025 Top 10 Risk and Compliance Report by clicking the link below.
