The Role of the Independent Reviewer in Ensuring the Adequacy of Risk Management Procedures

By Matthew Presto

Financial institutions are required to measure, monitor, and report risk in order to ensure their financial soundness. The risk management process has many related parts; overseeing all of them is a system of internal controls that ensures the other elements are working effectively.

Part of the internal control system is an independent review of the logical and conceptual soundness of the risk management process. The independent review–or audit–is typically performed by internal audit staff or by an external consulting firm. In either case, the reviewers must be independent of those who establish the risk procedures.

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