3 Mins
Our discussions with Chief Executives and Board members have highlighted that organisations today are facing immediate pressures associated with inflation, economic volatility and geopolitical risk. As the cost of living, goods and services soar, businesses and public services are making difficult decisions to ensure their financial sustainability, environmental, and strategic goals. Operational agility is nevermore crucial.
In times of economic volatility and the need for adaptation, there are not only threats to mitigate but also potential opportunities to exploit. Internal audit and risk management play a crucial role in ensuring your business’s resilience and financial sustainability.
The Role of Internal Audit
Internal Audit acts as your organisation’s critical friend. We conduct thorough evaluations of your internal controls, governance practices, and the efficiency of your operations. By conducting detailed audits and consultancy reviews, we pinpoint potential risks allowing proactive decision making on mitigating controls. We also assess the effectiveness of existing and planned controls and recommend improvements to keep your organisation resilient.
Understanding Risk Management
Risk management is the process of identifying, assessing, and prioritising risks to minimise their impact on your organisation. It involves developing strategies to manage or mitigate these risks, such as implementing controls, transferring risk through insurance, or avoiding certain activities altogether. Effective risk management helps your organisation achieve your strategic goals and objectives while safeguarding your assets and reputation.
How do Internal Audit and Risk Management relate?
Internal Audit support you to develop appropriate risk management frameworks to enhance your Board’s risk oversight and ensure the achievement of business goals and objectives:
- Independent Assurance: As part of either our co-sourcing and outsourcing offerings, we provide independent and objective assurance on the effectiveness of your organisation’s risk management processes. This helps you to ensure that risks are being managed appropriately and that controls are functioning as intended.
- Risk Identification and Assessment: Internal Audit will help you to identify and assess risks to your achieving your strategic ambitions and ensure that the risks identified operate within your Board’s risk appetite. We evaluate that management’s assessment of the likelihood and potential impact of these risks are appropriate, which aids in prioritising risk management efforts and resources.
- Evaluation of Controls: We assess the design and operating effectiveness of risk management controls against your Board’s risk appetite. We identify weaknesses or gaps in controls and recommend improvements to strengthen the risk management framework.
- Monitoring and Reporting: Internal audit monitors the risk environment and provides objective and independent reports on significant risk issues to the Board via its Audit Committee. This helps keep leadership informed about the organisation’s risk exposure and the effectiveness of risk management strategies.
- Advisory Role: Beyond assurance, internal auditors often act as advisors, offering insights and recommendations on best practices in risk management. We can assist you in developing and refining risk management policies, procedures, and frameworks to ensure their effectiveness and efficiency.
- Enhancing Risk Culture: We can also support you to promote a strong risk management culture within your organisation by raising awareness about risks and the importance of effective risk management practices. This includes training and educating Board members, senior management and other employees on risk management and risk-related matters.
- Facilitating Risk Management Processes: Internal audit can play a role in facilitating risk management activities, such as risk assessments and the implementation of risk mitigation plans. We can ensure these processes are robust, systematic, and aligned with organisational objectives.
The link between internal audit and risk management isn’t just about managing risk – it’s about building a resilient organisation ready for whatever comes next. Together, we can help you navigate challenges confidently and seize opportunities for growth, ensuring your business thrives in a competitive landscape.
Interested in hearing more? Get in touch with the team
David Archibald
Partner
Stuart Inglis
Director
Steve McNaught
Senior Manager
Emma Tilley
Assistant Manager