THE ROLE OF INTERNAL AUDIT IN RISK MANAGEMENT OF CREDIT INSTITUTIONS

Abstract

The gaps revealed by the global financial crisis led to growing expectations in relation with internal audit, both from management bodies in credit institutions and from regulatory authorities. It is thus desirable that, by acting objectively and independently, internal audit to have a valuable contribution in finding solutions to the problems faced by the banking system. This could be achieved by enhancing identification and evaluation of risks, by considering foreseeable changes of factors and trends, by reporting the key identified problems and by providing recommendations that add value to the organization. The objective of this paper is to analyze the role and the responsibilities of the internal audit with respect to risk management within the credit institutions. In this respect, there are highlighted those areas where internal audit and risk management either intersect or complement each other, as well as the benefits of the collaboration between these functions.

Keywords

• risk
• risk management
• internal audit
• value added
• risk-based practices