A successful organization is the
one who is always ready to take appropriate risks strategically and wisely. The
reformed range of rules for the financial institutions has enhanced the global
capital and liquidity rules in order to achieve a pliable banking sector.
Research done by eminent banking
supervisory authorities shows 10 reputed global banking institutes will fail to
achieve the risk data aggregation and risk reporting time limit of 2016. It is
always advised to the internal auditors to follow correct the risks in the
business.
Another analysis done on C-level executives from more than
430 global companies in the field of
banking & capital markets, insurance, energy & utilities,
health, and public service industries says that the Enterprise Risk Management
is top concern for all of them in 2014 than before. The reason for this is the
evolved nature of the risks that includes Strategic risks, operational risks,
credit risks, and market risks.
Role of Internal Auditors:
Internal audit plays a significant role in the
implementation of Enterprise Risk Management (ERM) for an organization. Some of
them have been elaborated below:
Explaining the board and
management on the importance of ERM:
The internal auditors can educate the senior management on
the importance of internal audit as well as ERM and their implications on the
organization. Through a standard risk management framework, he can explain the
various component of ERM. This will help the organization to develop focused
audit plans following the declaration of audit results.
Promote the Risk Assessment:
Risk assessment is a vital step that can keep on track of
the progress of ERM. An Internal Auditor
can efficiently facilitate the risk assessment process and provide appropriate
risk response.
Evaluate the Risk Management
Process:
The risk assessment process ought to be evaluated
considering Objective Setting, Event Identification, Risk Assessment and Risk
response Components. Even the effectiveness of evaluation needs to be
monitored.
Taking the above role of internal auditors into account, it
can be considered that the new set of rules defined by Basel III will
definitely stimulate the implementation strategy for ERM in all corporates.
That will be followed by adopting enhanced corporate governance practices by
all organizations thereby improving the risk compliance culture.
