Why Audit Risk Assessment Can Potentially Avert A Crisis

Audit risk assessment is a necessary step when deciding what to do next. This applies at the highest levels of government, and in small and large businesses equally. We hear a lot more about risk assessment as it applies to large institutions, partly because these are the organizations which are constantly featured in the media, and partly because they are more able to invest in the best technology to allow these audits to take place. There are, however, ways to assess risk in any business, and it is something which should be carried out wherever possible.

The standard indicators used in assessing risk are two fold. Firstly, probability is used to try to assess the likelihood of any given event occurring in a set time frame. Then, there is the factor of the impact which the event would have on the person or business carrying out the assessment. Both factors are necessary in determining which course of action you should take. If an event has a high percentage chance of occurring, but the potential impact of it is low, then it can usually be discounted from considerations.

Although it has always been possible to perform these calculations, it was always a very time consuming and difficult job. If many calculations were needed in short order, it meant a frantic rush to try to find people who were adept enough at the math involved to perform the calculations, and then to carry out all of the work on paper by long hand. Now, with modern computers, there is no need to find people who are adept at math. Anyone can enter the figures and have the computer do the work, and of course the time it takes is reduced to a fraction of that in former years.

One of the most important areas for risk assessment is in the management of computer systems themselves. This is because of the potentially serious consequences should information security be breached. It is quite possible for the entire plans of a company project to be leaked to the competition long before the project can even be launched. Whatever the probability of such an event occurring, you can be sure that the potential impact is catastrophic.

The software needed to carry out this type of audit risk assessment is not cheap to buy. Many companies know that the expense is more than justified because they are minimizing the risk of something potentially serious happening to the business. Any small business with the same security concerns is not likely to be able to afford the same high quality software. Service providers have therefore stepped into the market to satisfy the demand for a short term audit to be carried out without the need to own the software outright. You can now buy a one time audit risk assessment.

 


 

Internal Audit News:

 

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