Role in risk management

Internal auditing professional standards require the function to monitor and evaluate the effectiveness of the organization's Risk management processes. Risk management relates to how an organization sets objectives, then identifies, analyzes, and responds to those risks that could potentially impact its ability to realize its objectives.

Under the COSO enterprise risk management (ERM) Framework, risks fall under strategic, operational, financial reporting, and legal/regulatory categories. Management performs risk assessment activities as part of the ordinary course of business in each of these categories. Examples include: strategic planning, marketing planning, capital planning, budgeting, hedging, incentive payout structure, and credit/lending practices. Sarbanes-Oxley regulations also require extensive risk assessment of financial reporting processes. Corporate legal counsel often prepares comprehensive assessments of the current and potential litigation a company faces. Internal auditors may evaluate each of these activities, or focus on the processes used by management to report and monitor the risks identified. For example, internal auditors can advise management regarding the reporting of forward-looking operating measures to the Board, to help identify emerging risks.

После текстовые упражнения

(The exercises to be done after reading the text)

Упражнение 6. Ответьте на вопросы

1. What do internal auditing professional standards require?

2. What does risk management relate to?

3. What categories do risks fall under?

4. What kinds of activities does management perform?

5. What kinds of activities may internal auditors evaluate?

Упражнение 7. Заполните пропуски соответствующими предлогами.

Internal auditing professional standards require the function to monitor and evaluate the effectiveness… the organization`s Risk management processes.

1. Risks fall… strategic, operational financial reporting categories.

2. Management performs risk assessment activities as part … the ordinary course of business.

3. Corporate legal counsel often prepares comprehensive assessments… the current.

4. Example, internal auditors can advise management regarding the reporting of forward-looking operating measures to the Board , to help identify emerging risks

Упражнение 8.Закончите предложение, выбрав соответствующие по смыслу слова.

1. Internal auditing professional… require the function to monitor and evaluate the effectiveness of the organization`s Risk management processes.

1. plans

2. standards

3. wishes

2. Risk…relates to how an organization sets objectives, identifies, analyzes these risks.

a) management

b) accounting

c) work

3.Risks fall under strategic, operating, financial …and legal categories.

1. reading

2. writing

3. reporting

4. Management performs risk … as part of the ordinary course of business in each of these categories.

1. assessment activities

2. financial planning

3. capital planning

5. Sarbanes – Oxley regulations also require extensive risk assessment of …

1. capital planning

2. financial reporting processes

3. marketing planning

6. Internal auditors may evaluate each of these activities of focus on the processes used by management to report and monitor …. identified.

1. the risks

2. categories

3. budget