The Cost of NOT Using Physical GRC in the Convergent Age of AI

As security leaders, we spend a great deal of time forecasting threats and managing risk. But one of the biggest, and most overlooked, threats to our organizations today isn’t a new vulnerability or a state-sponsored cyberattack. It’s the absence of integrated Physical Governance, Risk and Compliance (GRC) strategies.

While billions are being invested into cybersecurity controls, many enterprises still rely on outdated, manual, or siloed processes for managing physical access, insider risk, and workforce compliance. And the result? Theft, fraud, workplace violence, regulatory fines, operational disruption, and reputational damage that’s often impossible to quantify. Across industries, these failures are costing companies hundreds of millions of dollars annually.

The irony is, the technology to prevent most of these incidents already exists. But unless we shift from a fragmented security posture to a converged, AI-powered Physical GRC model, we will continue to pay the price, financially, operationally, and reputationally.

Siloes Are the Silent Killer

Most CISOs and CSOs agree on the importance of converging cyber and physical security. Yet in reality, our physical security systems still operate in silos:

• HR manages onboarding and offboarding.
• Corporate Security and Facilities controls physical access.
• IT owns cybersecurity and identity governance.
• Security operations respond to incidents, often too late.

Without centralized visibility or unified controls, dangerous gaps go undetected. And those gaps aren’t limited to data breaches or tailgating, they extend to compliance failures, life safety issues, and high-value asset theft.

Here’s a cross-industry look at where organizations are vulnerable:

Real-World Hybrid Threats and What They Cost

Access Without Training Is a Safety and Compliance Nightmare

In a manufacturing facility, a newly transferred employee used their existing badge to access a hazardous materials zone. Unknown to supervisors, they had never completed required safety training. The mistake went unnoticed until a near-miss incident triggered an audit, and the company was fined under workplace safety regulations.

Had Physical GRC been in place, the system would have automatically blocked access based on training status logged in the HR system.

Instant Vetting in Sensitive Environments – Hospitals & Pharma

A hospital vendor arrived for a routine system installation, but was routed to a pediatric oncology ward due to a front-desk error. No visitor background vetting had occurred, and badge printing was manual. In high-stakes environments like healthcare or pharma, where visitors and contractors operate near patients or sensitive data, real-time vetting, background checks, and access controls aren’t just preferred, they’re critical.

With integrated GRC workflows, visitor identity could be vetted automatically via watchlists and compliance checks before access is granted. Segregation of Duties – Preventing Collusion and Theft

In a financial institution, a mid-level employee had physical access to the trading floor and credentials to back-office financial systems. While neither access alone was a red flag, together they violated internal segregation of duties policies. This convergence led to a fraudulent trading scheme that went undetected for months.

In another case, a warehouse employee had both badge access to storage areas and ERP permissions to update inventory records. Over time, they manipulated stock counts and physically removed high-value goods with zero alerts.

Physical GRC enforces policies across domains, identifying high-risk overlaps that would otherwise remain hidden.

Bioterrorism & Tampering – Food & Beverage

An individual posing as a refrigeration vendor gained access to a facility with a cloned badge. Once inside, they altered temperature controls tied to critical OT systems, potentially spoiling batches and risking consumer health. Without cross-verification between identity, work order, and physical presence, the breach wasn’t caught until distribution had already started.

Lab Contamination – Life Sciences

In a vaccine R&D facility, a terminated scientist’s badge was never revoked due to a disconnect between HR and the access control system. They accessed a staging lab and intentionally contaminated samples. Clinical trials were delayed by months, costing millions and damaging trust.

IP Theft – Aerospace & Defense

An engineer had authorized VPN and SAP PLM access, and badge credentials to a restricted prototype lab. Badge logs later revealed frequent after-hours visits, while IT logs showed large data exports. A cross-system investigation revealed the engineer had been exfiltrating UAV designs to a foreign entity.

Physical GRC with AI and behavior analytics could have automatically correlated off-hour physical activity, IP downloads, and export behavior for immediate flagging.

OT Sabotage – Defense Manufacturing

A contractor gained access to PLC interfaces tied to structural testing of aerospace materials. By subtly manipulating tolerances, they introduced defects intended to evade detection, sabotage that wouldn’t surface until those components were in flight.

Only a converged system that links identity, badge activity, PLC logs, and manufacturing ERP data can catch this type of multi-dimensional insider threat.

The Regulatory Reckoning

We are entering an era of heightened regulatory pressure, where demonstrating access compliance isn’t optional.

New standards and directives, like NIS2.0 in Europe, FERC/NERC CIP in energy, SOX, HIPAA, and FDA CFR Part 11 in the U.S., and emerging ESG mandates globally, hold organizations accountable for identity-based risk, across both IT and physical systems.

Regulators aren’t just asking who had access. They’re asking:

• Was access tied to job function and policy?
• Were credentials reviewed regularly?
• Were segregation of duties rules enforced?
• Was access revoked on time, and logged?

Manual processes won’t keep up.

Physical GRC Isn’t Just About Risk. It’s About Enabling the Enterprise

Embracing Physical GRC isn’t just about keeping bad actors out. It’s about enabling the right people, with the right credentials, at the right time, securely and efficiently.

Key benefits include:

• Automated compliance with audits, certifications, and regulatory policies.
• Elimination of manual tasks: onboarding, badge printing, physical audits.
• Segregation of duties enforcement across IT and physical domains.
• AI-powered anomaly detection across badge, ERP, HR, and OT systems.
• Improved employee experience: seamless access with the right approvals.
• Reduced operational downtime caused by errors or delayed provisioning.
• Workplace safety assurance by validating training, clearances, and background checks.

The AI Advantage. Are You Ready?

AI in security is only effective if it can see the full picture. Today’s platforms like ServiceNow, SAP NS2, Workday, SailPoint, Microsoft Security Copilot, and IBM WatsonX are powerful, but they require integrated, real-time data.

A converged Physical GRC system enables AI to:

• Correlate badge access with IT activity and policy violations.
• Detect unauthorized access before it becomes a breach.
• Automate decision-making based on HR events, OT triggers, and identity anomalies.

Time to Act

The cost of not using Physical GRC is far greater than any investment in modernizing it. It’s the cost of:

• Regulatory fines
• Safety violations
• Lost assets
• Operational sabotage
• IP theft
• Damaged brand trust

And in too many organizations, these risks are still hiding in plain sight, across unintegrated systems that were never designed to talk to each other.

Physical GRC isn’t a “nice to have.” It’s the foundation of resilient, intelligent, converged security in the AI era.

Because in this new reality, your weakest link isn’t just digital or physical, it’s the space in between.

Jasvir Gill is CEO and Founder of Alert Enterprise, leading a physical security transformation with the only AI-powered platform that converges physical security, IT, and OT, creating unified, simplified and automated workplace access.