Internal Audit Unveils Comprehensive Risk Management Framework
To ensure the smooth operation of its IT infrastructure, legal services, and finance functions, [Organization] has developed a robust risk management framework designed by internal audit.
Identifying Risks
Internal audit has identified several potential risks across various sub-categories, including:
- Information security breaches
- Vulnerability to malicious attacks
- Unclear lines of authority
- Complex organizational design
- Excessive divisional focus
- Lack of segregation of duties
Risk Criteria
To evaluate the significance of these risks, internal audit has established criteria that reflect the organization’s values, objectives, and resources. The criteria include:
- Impact: defining financial or non-financial consequences
- Probability: measuring the chances of a risk occurring
Risk-Based Planning
The objective of this framework is to target audit resources where risks are greatest. To achieve this, internal audit will periodically review and adjust its plans to ensure that they remain effective in mitigating these risks.
Risk Scoring
Once identified, each risk will be assessed and scored using a predetermined grid consisting of four scoring levels:
- Low
- Medium-Low
- Medium-High
- High
The scoring process is subjective and based on professional judgment.
Integrating RA Results
The results of the risk assessment will be consolidated into an audit universe, which will serve as the basis for developing multi-annual and annual internal audit plans. These plans will prioritize audit efforts on areas with the highest risk scores.
Audit Plan Development
Internal audit will use the information collected from the risk assessment to draft its audit plan. The plan will then be reviewed and finalized with executive management, taking into account any necessary adjustments to ensure that it is realistic and considers all relevant information.
Approval
The final audit plan will be published annually, outlining the organization’s priorities for internal audit activities.
By implementing this comprehensive risk management framework, [Organization] aims to ensure the effective management of its risks and optimize its resources.