What is Risk and Assurance Service?
The global financial crisis of 2008 and its aftermath convinced the companies worldwide to adapt the defensive risk management posture. Moreover, new challenges are circumventing the Business Risk environment day by day, shifting the tide towards a collaborative approach to manage risk with risk accountability sitting alongside the defense mechanism. Aligning the risk decisions with the business strategy helps dealing in the complex situations with timely consultation. A diligent and independent risk assurance service will not only protect the environment but also deliver value.
What is Risk Assurance?
Risk is an eminent part of the business. Though it cannot be escaped, but can be mitigated to a large extent. The risks exist in various forms, be its cyber risks or technical risk, no business, nowadays, is free from it. So, it is always advisable to be prepared for it beforehand. That’s where Enterslice’s Risk assurance services come in.
In assuring the risk, we focus on clients’ processes, policies, systems, and controls in a new dimension. The focus areas include IT technology, finance, debtors, cash management, data analytics, regulatory requirements, data security and privacy, internal audit, and the third parties our clients rely on. The timely avail of the assurance services reduce risk and deliver high quality results, while meeting the objectives of the business.
Therefore, it can be said that risk management or risk assurance is the process including identification, assessment, management, and control of potential events or situations in order to systematically achieve the goals of the organization as a whole.
Players of Risk assurance process
Generally, three categories of persons are associated with the risk assurance process:
- Person or group directly associated with the entity, its operation and function, processes, systems, or other concerned matter, and oversight functions such as legal, compliance, and finance;
- The persons making the risk assessment;
- The ultimate user of the risk assessment such as management and Board.
Risk Assurance Framework
The need for assurance services for risk management arises from the governance processes of an organization. The concept of assurance originated in accordance with the stewardship relationship between the board of directors of an organization and its shareholders. The purpose is to both delegate and limit power to pursue the organization’s strategy and direction in a manner that increase the chances for the long-term success of the organization. Assurance processes monitors the actions of the management and Board in the exercise of that power.
Risk management is a management process involved in promoting the efficient and effective achievement of organizational objectives. Both risk assurance and risk management are complementary processes.
Role of the Risk assurance service providers
The major role of the risk assurance service providers is to provide assurance that:
- The risk management process has been applied appropriately in the organization and that suitable and sufficient processes has been bought into action.
- The strategic needs and intent of the organization is kept into mind while framing the risk management policy.
- The system has been created in such a manner that all material risks are being identified at infant stage and treated accordingly.
- The cost-effective treatment plans are present for all prioritized intolerable risks.
- Controls are designed in a manner to keep with the outputs of the risk management process.
- Adequate and effective controls are present.
- There is no place for over-controlled or inefficiently controlled risks.
- Effective Line management review and other non-audit assurance activities are in place and are involved in improving controls.
- There is a proper and timely execution of Risk treatment plans.
How do Risk Assurance Service Providers work?
The following activity comes under the purview of Risk Assurance Service Providers:
- Establishment of an organization-specific, documented riskmanagement policy and framework;
- Fixation of responsibility for effective identification and management of significant risks which may lead to substantial loss in the business;
- Provision for structured analysis of the risk of the organization taking the following into consideration:
- Risks, their current ratings and associated exposers;
- The objectives of the organization to which the risk is applied to;
- The individuals responsible for identifying and managing risk in the organization;
- The systems created to identify and manage risks.
Relationship between Risk assurance services and Organizational Strategy
The strategy for risk assurance is closely ranged with the corporate or other strategic plans of the organization. The other factors coming into the picture is the legal, legislative, cultural, and economic environment in which the organization is operating. Moreover, the nature of the activity of the organization and its long-term plans also makes space for assurance needs.
Users of Organizational Risk Assurance
The first and foremost users of the risk assurance service are the Board and the Management. They regularly need to keep a watch over the policies in practice, the need for amendments and their applicability in different departments. Other users of the risk assurance may include the promoters, regulators, government, or customers for whom the organization is producing goods and services. The media houses, the critics and the competitors may be further interested in knowing the risk associated with a particular business to give up their opinion or to plan a strategy. An organization at more risk seems to be a more lucrative option for takeover or acquisition by the competitors.
The way forward
The establishment of an effective and efficient risk management is a key responsibility of management. A holistic approach to the identification of organizational risks shall be adopted by Board and Management. The risk assurance service providers can provide state of the art solutions of all the risk management issues, and can also co-operate in increasing the overall productivity of the business.