Evaluating risk management is entrusted to experts performing an internal audit. The evaluation process will emphasize the structure and functioning of the risk management process in a particular division. The evaluation will try to determine how the system works.
The process, both at the level of structure and operation, can be determined with checklists or flowcharts. The gaps between what should happen and what has happened, in fact, need to be identified. The results of these evaluations are reported by the ordinary means of the company. To understand this process a bit better, contact Cane Bay Partners today.
It is the function of this particular management that determines whether the objectives through the “risk response” process have been achieved. Control becomes an integral part of the process as the organization attempts to accomplish this goal. There is a vast variety of commands that can be used to verify the compliance of established action plans and keep the organization in line with the previously defined objectives.
Main management activities
The control exercised over the review of managers’ performance reports at various levels of the organization. The check is performed by comparing the managers’ reports with other information. Some of them may come from external sources.
Some controls can be done to verify the accuracy and completeness of transactions as well as the organization of such transactions. This may include auditing transaction accounting as well as reviewing new information systems. A physical control audit can be conducted to ensure that the assets are well protected and that the notional stocks are periodically compared to actual inventories.
Different data equals different results
Efficiently managing risks can lead to a comparison and a correlation between the various data. A comparison between operational and financial data may reveal some anomalies. The entire risk management process, and in particular the risk response part, depends to a large extent on the entity’s information system.
Thus, all controls related to the entity’s risk response must attach great importance to the information system. The decisions that are made, the actions that are about to be completed, the performance that is evaluated, and whether or not the advertised objectives are achieved against the information provided by the entity’s information system must be integrated into the system.