New Approach to GRC in Manufacturing

The manufacturing industry's digital transformation has revolutionized production processes, supply chain management, and customer engagement. It's time for GRC programs to undergo the same transformation, moving from manual, static, and reactive approaches to automated, dynamic, and proactive risk management that matches the sophistication of modern manufacturing operations.

Addressing Manufacturing's Unique Risk Profile

The manufacturing industry's risk profile is fundamentally different from other highly regulated sectors. Companies must follow:

• regulatory frameworks spanning environmental compliance,

• worker safety (OSHA),

• product quality standards,

• international trade regulations,

• and increasingly complex cybersecurity requirements for industrial control systems.

  
  

Yet most organizations are still managing these diverse risks through disconnected spreadsheets, static documentation, and manual processes that were designed for a pre-digital manufacturing era.

Manufacturing organizations face challenges, such as supply chain disruptions, cybersecurity threats targeting operational technology, stringent environmental regulations, and the convergence of IT and OT systems that traditional GRC platforms simply cannot handle effectively.

Static Documentation in Dynamic Manufacturing Environments

Manufacturing environments are inherently dynamic, with production lines, supply chains, and operational technology systems changing continuously. However, GRC programs dedicated for manufacturing still rely heavily on static Word documents, Excel spreadsheets, and PDFs that become obsolete almost immediately after creation.

Consider a modern smart factory with hundreds of IoT sensors, programmable logic controllers, and automated systems that can be reconfigured in real-time. Traditional GRC approaches attempt to document these environments through lengthy system security plans and compliance matrices that are outdated. This creates a fundamental disconnect between the actual risk posture of manufacturing operations and what compliance documentation suggests.

The IT-OT Convergence Challenge

One of the most significant challenges facing manufacturing GRC is the convergence of Information Technology (IT) and Operational Technology (OT) systems. Traditional GRC frameworks were designed when these systems were air-gapped and isolated. Today's Industry 4.0 manufacturing environments feature interconnected systems where a cybersecurity incident in the corporate network can directly impact production lines.

Manufacturing companies must now comply with frameworks like ISA/IEC 62443 for OT security while simultaneously meeting traditional IT compliance requirements such as SOC 2, ISO 27001, and industry-specific regulations. This creates a complex web of overlapping requirements that traditional GRC platforms struggle to manage cohesively.

The regulatory environment is becoming even more complex, with new requirements like the EU's Cyber Resilience Act and enhanced critical infrastructure protection mandates. All of these require manufacturers to report cyber incidents within 72 hours. Managing this regulatory complexity requires platforms that can automatically map controls across multiple frameworks and provide unified visibility into compliance posture.

Supply Chain Risk Management Revolution

Manufacturing's global supply chains create unique GRC challenges that extend far beyond traditional vendor management. A single manufacturing company might work with hundreds of suppliers across multiple countries, each with their own risk profiles and compliance requirements. Traditional approaches to third-party risk management, which rely on annual questionnaires and static assessments, are wholly inadequate for managing these complex relationships.

Modern manufacturing supply chains are also increasingly digital, with suppliers integrated into production planning systems, quality management platforms, and even direct connections to manufacturing execution systems.

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Modern GRC platforms streamline compliance workflows and automate routine tasks, such as obtaining certificates. Rather than manually chasing compliance documentation from hundreds of suppliers, manufacturing companies can automate much of this process while maintaining continuous visibility into their supply chain risk posture.

The Operational Technology Security Gap

Manufacturing companies face a critical gap in their GRC programs when it comes to operational technology security. Most GRC platforms were designed for traditional IT environments and lack the specialized capabilities needed to assess and manage risks in industrial control systems, SCADA networks, and manufacturing execution systems.

OT environments have unique characteristics that traditional GRC approaches cannot accommodate. These systems often cannot be patched during production hours, may run on legacy operating systems that are no longer supported, and require specialized security controls that differ significantly from traditional IT security measures. Additionally, the consequences of security incidents in OT environments can include:

• production shutdowns,

• safety hazards,

• and environmental impacts that go far beyond typical data breach scenarios.

The rise of Industry 4.0 and smart manufacturing has only amplified these challenges. Manufacturing companies are implementing IoT sensors, edge computing devices, and cloud-connected systems throughout their production environments. This creates new levels that must be continuously monitored and assessed for compliance.

Regulatory Change Management in Manufacturing

Environmental regulations, safety standards, product quality requirements, and cybersecurity mandates are constantly evolving, often with short implementation timelines and significant penalties for non-compliance.

Traditional GRC approaches rely on periodic regulatory updates and manual tracking of regulatory changes, which is insufficient for the pace of change in manufacturing regulations. Companies need real-time alerts and automated impact assessments when new regulations are published or existing requirements are modified.

The Automation Imperative

Manufacturing is fundamentally about automation and efficiency, yet most manufacturing companies are managing their GRC programs through manual, labor-intensive processes that would be considered primitive in any production environment. This creates a cultural disconnect where companies that have invested millions in automating their production processes are still managing compliance through email chains and spreadsheet updates.

The irony is particularly stark when considering that manufacturing companies have extensive experience with process automation, continuous monitoring, and real-time data analysis in their production environments. These same principles can and should be applied to GRC programs.

Real-Time Visibility and Continuous Monitoring

Manufacturing operations rely on real-time dashboards, continuous monitoring, and immediate alerts when systems deviate from expected parameters.

Real-time data view is particularly important in manufacturing environments where risks can materialize quickly and have immediate operational impacts.

• A cybersecurity incident that affects production systems,

• a supplier quality issue that impacts product safety,

• or an environmental compliance violation

  
  

require immediate response and remediation.

Traditional GRC approaches that rely on periodic assessments are fundamentally incompatible with the real-time nature of manufacturing operations. Companies need continuous visibility into their risk and compliance status, with the ability to immediately identify and respond to emerging issues.

Real-time insights through live dashboards provide continuous visibility, aligning with manufacturing companies' operational expectations.

The Path Forward for Manufacturing GRC

Manufacturing companies that want to modernize their GRC programs need platforms that understand the unique characteristics of industrial environments. This includes:

• support for OT security frameworks,

• supply chain risk management,

• regulatory change management,

• the automation capabilities.

The transformation of manufacturing GRC requires more than just digitizing existing processes. It requires rethinking how risk and compliance are managed in dynamic, interconnected manufacturing environments where traditional boundaries between IT and OT, internal operations and supply chains, and compliance and operations no longer exist.

AI automation with Rosella

Parakeet Risk's intelligent compliance agent, Rosella, represents a paradigm shift toward dynamic, automated compliance management that can keep pace with modern manufacturing operations. Rather than relying on human-generated static documents, the platform:

• automatically tracks changes in manufacturing systems,

• updates compliance postures in real-time,

• and provides continuous visibility into risk across production environments.

Key transformations driven by AI like Rosella include:

• Automated and Dynamic Compliance Instead of relying on static documents like spreadsheets and PDFs, which quickly become obsolete in dynamic manufacturing environments, Rosella automatically tracks changes in manufacturing systems and updates compliance postures in real-time. This provides continuous visibility into risk across production environments.

  
  

• Intelligent Research and Auditing Rosella automates time-consuming research and audit tasks, improving the frequency and accuracy of GRC processes. It can conduct in-depth research by accessing regulatory websites, internal systems (like ERPs), and various data formats to provide comprehensive reports.

  
  

• Unified IT and OT Risk Management Modern manufacturing faces challenges from the convergence of Information Technology (IT) and Operational Technology (OT). An AI agent can manage the complex web of requirements from frameworks like ISA/IEC 62443 for OT security alongside IT compliance standards such as SOC 2 and ISO 270011.

  
  

• Streamlined Supply Chain Management AI helps manage risks in complex global supply chains by automating tasks like collecting compliance documentation from hundreds of suppliers. It can monitor factors like geopolitical shifts and market changes to forecast disruptions and identify optimal suppliers and routes. Rosella can analyze a company's supply chain to find gaps and assess third-party risks.

  
  

• Proactive Regulatory Change Management The manufacturing regulatory landscape is constantly changing. AI agents can provide real-time alerts from federal and state regulators, allowing companies to immediately assess the impact of new rules on their operations.

  
  

• Enhanced Decision-Making By simulating risk scenarios and analyzing real-time data, AI provides leaders with actionable insights. This allows manufacturers to forecast supply chain disruptions, anticipate market shifts, and develop contingency plans. Rosella can execute multi-step workflows that combine web searches, data analysis, and report generation to support strategic decisions.

  
  

• Improved Safety and Quality Control In the broader manufacturing environment, AI contributes to risk management through predictive maintenance, which reduces equipment failure and downtime. AI-powered computer vision can also identify minute product defects with high accuracy, improving quality and preventing recalls.

By embedding AI into core GRC functions, manufacturers can move beyond manual, labor-intensive processes and treat risk management as another automated, efficient process optimized for effectiveness. This transformation allows companies to become more agile and resilient while reducing the administrative burden of traditional compliance programs.

Conclusion

The new approach for GRC in manufacturing is about turning risk management into simple workflows, providing proactive risk detection, and enabling streamlined compliance tasks.

Ready to transform your approach to risk and compliance? Contact us and discover how Parakeet’s automated solutions can help your manufacturing organization.