Role Of Internal Auditing In Enterprise Wide Risk Management
Introduction The importance to strong corporate governance of managing risk has been increasingly acknowledged. Organizations are under pressure to identify all the business risks they face; social, ethical and environmental as well as financial and operational, and to explain how they manage them to an acceptable level. Meanwhile, the use of enterprise-wide risk management frameworks has expanded, as organizations recognize their advantages over less coordinated approaches to risk management. Internal auditing, in both its assurance and its consulting roles, contributes to the management of risk in a variety of ways.
What is Enterprise-wide Risk Management? People undertake risk management activities to identify, assess, manage, and control all kinds of events or situations. These can range from single projects or narrowly defined types of risk, e.g. market risk, to the threats and opportunities facing the organization as a whole. The principles presented in this paper can be used to guide the involvement of internal auditing in all forms of risk management but we are particularly interested in enterprise-wide risk management because this is likely to improve an organization’s governance processes.
Enterprise-wide risk management (ERM) is a structured, consistent and continuous process across the whole organization for identifying, assessing, deciding on responses to and reporting on opportunities and threats that affect the achievement of its objectives.
Responsibility for ERM The board has overall responsibility for ensuring that risks are managed. In practice, the board will delegate the operation of the risk management framework to the management team, who will be responsible for completing the activities below. There may be a separate function that co-ordinates and project-manages these activities and brings to bear specialist skills and knowledge.
Everyone in the organization plays a role in ensuring successful enterprise-wide risk management but the primary responsibility for identifying risks and managing them lies with management. Get Best Assignment Writing Service with HelpHub