Differences Between Risk Assessment vs. Internal Audit
Between tending to your business’s general operating system and your confidential company files and client data, you and your IT team likely have your hands full keeping everything running smoothly. In order to maintain a healthy, accurate and impermeable computing system, as well as the peace of mind that comes with those technological ideals in business, you need to adopt and use certain measuring tools and checklists, which is where risk assessment and internal audits come into the picture.
Risk Assessment and Internal Audit as a Framework
It is important that you continually monitor your operating system and critical data it to maintain quality, measure risks and ensure that you are in compliance with state, federal and international regulations. While risk assessment and the internal audit are different processes, with their own individual set of checklists, you can combine both to work together for a tighter operating system and a framework that helps you move toward a well-oiled enterprise risk management (ERM) system.
CFO discusses the combined benefits of risk assessment and the internal audit by stating that “Both, after all, can lay overlapping claims to risk control, risk finance, data security, fraud prevention, and other components of what’s called enterprise-risk management.” First, though, it helps for you to understand the finer points of each process before trying to put them together to meet all your needs.
What Is Risk Assessment and Why Is It So Important?
Risk management works through a framework that offers you and your IT professional staff an effective process and methods to follow to achieve your desired results for your organization’s computing system. Basically, risk assessment helps you lurking problems with your company’s information, operations or both, regardless of when an upcoming audit is on the line.
In the most basic sense, you perform risk assessment for pure quality assurance for your computing system and the data that you and your IT team manage each day. Of course, there are more official, specific and goal-oriented reasons that you need to adhere to strong risk assessment procedures, but it is, in itself, inherently important to helping you keep everything running smoothly.
It might help you to consider some concrete reasons that you and your IT staff might perform a focused risk assessment. Consider a few of the following reasons to help you understand just what it is:
- To Justify New Costs. Whether you want to add new security or hire additional staff, a risk assessment can help you justify the cost to your CEO or budget committee.
- To Increase Productivity and Streamline Success. The more you practice finely tuned risk assessments, the better you can your team become at uncovering inconsistencies and problems before they grow out of control. By creating a review structure and working with your team to embed that structure, you and your team can tend to daily tasks with more confidence, knowing the foundation of your system is in solid working order. Additionally, if you do receive notification of an audit, your hard work on risk assessment will pay off by not throwing your team into a tailspin.
- To Improve Communication. Risk assessment helps you and your team work together better as you form and become familiar with a common operations and information language to keep your system in good working order. This shorthand is another way that risk assessment saves time, energy and resources.
Knowing the reasons you need solid risk assessment is important, but it is even more important to understand the process itself and what you need to examine in risk assessment:
- Identify any risks, as well as risk owners, related to your operating system.
- Assess the possibility risks and their potential impact.
- Explore the level and intensity of risks.
- Include regulations and government laws in your risk assessment to make sure you have covered all updates.
- Make sure to include the following in your risk assessment: a list of hardware and software, processes, policies, procedures, guidelines, repositories, guidelines and security measures.
- Adhere to a series of informational management standards set forth by the International Organization of Standardization (IOS), in cooperation with International Electrotechnical Commission (IEC), to remain compliant with various laws and regulations.
With these considerations in mind, you and your team can keep your operating system and data protected on a daily basis, but you do not need to panic if you know that an audit is looming.
What Does an Internal Audit Mean to Your Organization?
Essentially, an internal audit tests the quality of your risk assessment process. It is a measure of quality assurance that helps you and your IT team unearth errors, inconsistencies and vulnerabilities in your regular risk assessment tasks and approaches.
Additional functions and benefits of an internal audit might help you distinguish the process from that of risk assessment:
- Peer into the overall adequacy of the risk management structure in place.
- Test the implementation of risk assessment processes and the risk management framework.
- Audit management’s commitment to shepherding risk assessment measures to ensure quality and efficacy.
- Provides and independent and objective view of the risk assessment operations to help the IT team understand issues so they can work to improve them.
All of the findings in each internal audit go to the appropriate review committee for your organization. Finally, you will submit your findings to your internal audit body so everyone can understand the health of your system, as well as your organizational and client information. With an objective frame of mind from everyone, looking toward a continuing effort to streamline processes, you and your IT team can work with your internal audit to continually monitor and improve your results.
Reach Out for Help From Industry Experts
If you and your team are still figuring out the fine differences between risk assessment and internal audit, including the overlapping points, you might benefit from hiring professionals who understand the intricacies of both. Contact us at I.S. Partners, LLC by calling 215-675-1400 or request a quote to find out more about our services. We can help ease the learning process and help you get excellent results in ERM in the meantime.