Risk Managers and Internal Auditors A COLLABORATIVE PROCESS - PowerPoint PPT Presentation

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Risk Managers and Internal Auditors A COLLABORATIVE PROCESS

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'There's always been a bit of a turf war among the different risk managers. With enterprise risk models and the advent of the chief risk officer, the battle ... – PowerPoint PPT presentation

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Title: Risk Managers and Internal Auditors A COLLABORATIVE PROCESS


1
Risk ManagersandInternal AuditorsA
COLLABORATIVE PROCESS
  • Presented by Alan J Wilson, Risk Manager
  • Edith Cowan University
  • Perth
  • May 2000

2
Theres always been a bit of a turf war among
the different risk managers. With enterprise
risk models and the advent of the chief risk
officer, the battle has heated up.
(Kloman, 1999).
3
Further, traditional risk managers. have
failed to develop skills that would allow them to
contribute to the broader idea of integrated risk
management approaches in their organisations..
(Kloman, 1999)
4
Risk Managers are first and foremost facilitators
  • They act as facilitators of the risk management
    process within the organisation.

5
  • They pull together a range of functions, experts,
    people with a range of responsibility, eg. legal,
    finance, OSH, environment, architects, engineers,
    marketing, planners and so on to assist in the
    management of risk including a range of treatment
    options.
  • They are integral to the Corporate Governance
    process.

6
  • They are fabulous -
  • Communicators
  • Facilitators
  • Analysts
  • Thinkers
  • Negotiators
  • ..and so on

7
  • But do they need also to understand credit risk,
    foreign exchange and various hedging schemes,
    securetisation etc?

8
What is Internal Auditing?
  • Internal auditing is an independent, objective
    assurance and consulting activity designed to add
    value and improve an organisations operations.
  • It helps an organisation accomplish its
    objectives by bringing a systematic, disciplined
    approach to evaluate and improve the
    effectiveness of risk management, control, and
    governance processes.

9
.Not only is the auditor the right arm of
management in ensuring that policies and
procedures are carried out effectively and that
risks are kept to a minimum, but auditors are
actively involved with governance.. (Institu
te of Internal Auditors)
10
  • ..internal audit departments may be the most
    at-risk group in many organisations if it fails
    to be relevant to organisation needs..
  • ..few internal audit departments contribute to
    risk management.
  • (The Internal Auditor, April 2000)

11
  • Risk Managers
  • and
  • Internal Auditors
  • Can Work Together
  • to Add Value to
  • the Process of Risk Management
  • by...

12
  • Ensuring risk-based auditing through
    collaboration and use of the risk managers Risk
    Register.
  • Benefit
  • Avoids duplication of effort.
  • Utilises risk managers RMIS and analysis of level
    of risk.
  • Ensures internal audit focuses on the
    organisations risk priorities.
  • Risk register captures risks from throughout the
    organisation.

13
  • Regular interaction between risk manager and
    internal audit.
  • Benefit
  • Ensure audit team is appraised of any changes to
    risk profile.
  • Receive audit reports on a timely basis to update
    risk treatment plans and action.

14
  • Ensuring risk management input into Audit Plan
  • Benefit
  • Again avoids duplication of efforts.
  • Ensures audit plan focuses on high priority
    risks.
  • Obtains background information from risk manager
    and rationale for level of risk.

15
Further BenefitsRisk ManagementandInternal
AuditReport to one committee ofCouncil/Senate
16
  • Risk Management and Audit Committee
  • Benefit
  • Improves corporate governance throughout the
    University.
  • Avoids necessity for further committee and
    duplication of effort and resources.

17
  • Expansion of skills base and knowledge
  • Benefit
  • Removal of another silo.
  • Improves horizontal communication and information
    throughout the organisation.

18
HOWEVER..
  • Internal Audit Must Maintain Total Independence

19
  • As a result must remain separate from risk
    management which is a facilitation, advisory,
    operational (amongst others) role.
  • Rationale
  • Audit must have an independent monitoring role
    that is integral to corporate governance.

20
CONCLUSION
  • Significant advantages from collaboration with
    Internal Audit towards the achievement of a
    valued risk management program and lowering of
    the cost of risk.

21
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