Why ERM and GRC Are Failing—And How IRM Can Fix It

Risk management is at a breaking point. Enterprise Risk Management (ERM) and Governance, Risk & Compliance (GRC) were designed to provide structure and oversight, yet both have evolved into fragmented, compliance-driven disciplines that lack strategic impact. Boards and executives are demanding change. According to KPMG’s 2024 Future of Risk Report, 61% of executives expect a substantial rise in their risk responsibilities over the next three to five years, yet only 31% report significant integration of risk management across key business units. Meanwhile, 90% have observed an acceleration in risk transformation driven by AI, cybersecurity threats, and regulatory expansion.

The old approach—managing risk in silos with disconnected ERM and GRC teams—is no longer sustainable. Forward-thinking organizations are transitioning to Integrated Risk Management (IRM), a framework that unifies ERM, GRC, Technology Risk Management (TRM), and Operational Risk Management (ORM). IRM aligns risk oversight with business objectives, enabling organizations to proactively anticipate, mitigate, and leverage risk.

Companies that fail to adopt IRM will struggle to keep up with regulatory changes, technological disruptions, and board expectations. The time for IRM is now.

The ERM-GRC Disconnect: Two Disciplines, Same Problems

For decades, organizations have treated ERM and GRC as separate functions managed by different teams, methodologies, and technologies. ERM focuses on identifying strategic risks ensuring companies understand threats to financial performance, reputation, and long-term growth. Meanwhile, GRC ensures compliance with regulations, policies, and ethical standards to prevent legal and reputational damage.

Despite their different origins, both disciplines suffer from the same core weaknesses:

IRM Navigator™ Framework, Wheelhouse Advisors

• Siloed Risk Data – ERM and GRC teams work in separate systems, preventing a unified view of enterprise risks.

• Periodic, Backward-Looking Assessments – Annual risk reports and compliance checklists fail to keep up with real-time threats like AI-driven fraud and cybersecurity attacks.

• Lack of Board-Level Insights – Boards receive disjointed ERM and GRC reports, missing the bigger picture on enterprise-wide risk exposure.

• Failure to Drive Business Value – North Carolina State University’s 2024 The State of Risk Oversight Report notes that organizations report a misalignment between risk management and business strategy, causing risk teams to be reactive rather than proactive.

The Path Forward: Connecting ERM and GRC

IRM provides the missing link between ERM and GRC, ensuring that:

• ERM’s risk identification connects to GRC’s compliance enforcement.

• Risk insights flow across audit, compliance, and business units.

• Executives receive a single, real-time source of truth for enterprise-wide risk.

IRM transforms risk management from a cost center into a strategic enabler.

The Four IRM Objectives: PRAC

To successfully integrate ERM and GRC, organizations need a unified framework for risk oversight. The IRM Navigator™ framework provides four key objectives that align risk with business strategy:

1. Performance – Is risk management supporting business growth?

   • IRM ensures that risk insights inform decision-making, helping companies take calculated risks that drive innovation and profitability.

2. Resilience – Can the organization withstand and recover from disruptions?

   • IRM strengthens resilience by integrating ERM’s risk forecasting with GRC’s policy controls, ensuring businesses can navigate crises with minimal impact.

3. Assurance – Do boards and stakeholders trust risk data?

   • Assurance is where ERM and GRC must converge. ERM provides a big-picture risk perspective, while GRC enforces controls that mitigate those risks. IRM bridges the gap by giving leadership a real-time, strategic risk overview.

4. Compliance – Are regulatory requirements met while managing enterprise risks?

   • IRM embeds compliance into the overall risk strategy, ensuring that regulations are met and aligned with broader business goals.

IRM enables companies to move beyond risk avoidance and use risk as a competitive advantage.

The IRM Market: Growth, Segmentation, and Trends

IRM is a rapidly expanding market driven by the growing complexity of risks, regulatory demands, and the need for real-time risk intelligence. Unlike standalone ERM and GRC solutions, IRM integrates four key risk domains:

1. Enterprise Risk Management (ERM) – Identifies and manages strategic and operational risks.

2. Governance, Risk & Compliance (GRC) – Ensures adherence to regulatory, ethical, and policy-based requirements.

3. Technology Risk Management (TRM) – Manages cybersecurity, IT, and digital transformation risks.

4. Operational Risk Management (ORM) – Focuses on third-party risks, supply chain vulnerabilities, and ESG compliance.

IRM Market Growth & CAGR

According to the latest IRM Navigator™ Quarterly Insight Report (ERM Edition):

• The total IRM market is projected to grow from $55.8 billion in 2024 to $121.8 billion by 2031, representing a CAGR of 10.2%.

• ERM technology alone is expected to grow from $5.5 billion in 2024 to $11.4 billion by 2031, reflecting a CAGR of 9.4%.

• GRC solutions are projected to grow from $16.5 billion to $32.5 billion in the same period, with a CAGR of 8.8%.

The fastest-growing segment within IRM? Technology Risk Management (TRM), driven by AI, cybersecurity, and IT resilience.

What’s Next: The Rise of Technology Risk Management (TRM)

Technology is reshaping enterprise risk, and Technology Risk Management (TRM) is emerging as a critical pillar of IRM. As businesses rely more on AI, automation, and digital infrastructure, boards demand stronger oversight of technology risks.

The IRM Navigator™ Quarterly Insight Report – TRM Edition, set for publication in February 2025, will analyze:

• How AI, cybersecurity, and data privacy risks are transforming risk management.

• Why organizations must integrate IT risk into their broader IRM strategy.

• Which vendors are leading in TRM, and how they align with IRM.

Key TRM Trends to Watch

1. AI Risk Governance – With AI driving automation across industries, organizations must manage AI-related risks, from bias in machine learning to AI-driven fraud.

2. Cybersecurity Resilience – The frequency and sophistication of cyber threats are increasing, requiring proactive, integrated risk strategies.

3. Digital Supply Chain Risks – As businesses become more interconnected, third-party technology risks rise, necessitating stronger TRM frameworks.

Organizations that fail to integrate TRM into their IRM strategy will face growing exposure to cyber incidents, AI misuse, and digital infrastructure failures. The upcoming TRM report will provide actionable insights on managing these risks while leveraging technology for competitive advantage.

Final Thought: The Time for IRM Is Now

ERM and GRC are essential—but alone, they are not enough. Organizations that cling to outdated, fragmented risk management approaches will fall behind. The future belongs to those who integrate risk management, leverage real-time intelligence, and make risk a strategic enabler—not a compliance burden.

IRM is the future. Are you ready for it?

Sources

• KPMG – Future of Risk Report 2024

• Deloitte – Global Risk Management Survey, 12th Edition

• Deloitte & Harvard Law School Forum – Risk Oversight in 2025

• North Carolina State University – 2024 The State of Risk Oversight Report

• Wheelhouse Advisors – IRM Navigator™ Quarterly Insight Reports (ERM, GRC, and TRM Editions)