Risk Score Model

I was reading an interesting case study recently which seems straight out from the real world wherein CEO and Chairman of Audit Committee were arguing with each other as to how internal auditors should perform their work. CEO was stressing on lack of understanding of internal auditor about responsibilities and authority aspects of controls. He was vary furious about fault finding nature of their reports and he felt need for discussing the report with him before presenting it to the committee. Mr. Chairman at first was more interested in bridging the control gaps found in the report but later on some what convinced with what CEO was saying started instructing the Internal Auditor to pursue more transparency with the auditees henceforth. Not everyone in the meeting was of the view that the internal audit function is adding value to the firm.

Internal control is no longer the exclusive domain of highly trained accountants on the internal auditing staff. Corporate Boards, Committees, CEOs, CFOs and employees at virtually every level are now seen as responsible for designing, implementing and monitoring these controls; few, however, have the training and background needed to fulfill this complex responsibility along with understanding other's point of view of controls within the organization.

Every employee in an organization has a stake in the control process. So there is quite a possibility of conflict situations due to difference in the risk perceptions within the Organisation. Everyone who is made responsible needs to know the control framework in its entirety and how they work together.

Using a collaborative approach for building a culture of effective risk management through extensive employee involvement in identifying and controlling risk factors is essential. And thus, Control Self Assessment is being recognized as a powerful tool by businesses to help auditors, management, and others examine and assess business processes and control effectiveness within their organizations. However, harmonization in understanding the controls from various perspectives is also very essential. Conflict of interests due to varying use of management accounting information by different business managers should not hamper the risk management processes.

I have attached a risk score tool which will prove useful to score risk perspective of various participants and to foster innovative discussion between them to resolve conflicts and improve risk management processes.

Participative and playful discussion on differences of opinion makes the participants learn more about the controls and their own responsibility regarding risk management. They tend to become involved in designing and executing the controls that contribute to meeting the organization's goals and objectives.

Download Risk Model