Best practice approaches for internal control and audit systems

 

Implementation of regulatory requirements in the Governance, Risk and Compliance sector

 

Best practice approaches for internal control and audit systemsRisiko Managerissue 16/2009

As a result of the current crisis in the banking sector, customers, the state and shareholders are equally doubtful of the effectiveness of risk management, internal control systems and their auditing through inspections and auditors. The most popular demands currently extend to more regulation, stricter controls and tougher penalties for non-compliance. This is counterproductive for the credit institutions, as they actually need to reduce their costs rather than spending more money on implementing new regulations. The prospect of increasing turnover and profit is, however, low; potential reputation loss and the danger of loss of confidence are, on the other hand, enormous. The financial crisis may well have bottomed out, but it leaves behind clear traces in the real economy. The expense ratio of German banks was – and is – too high when compared internationally.

With efficient risk management, however, many of the new regulations can be implemented at a comparatively low cost. […]

 

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