Risk Assessments and Internal Audit Usage in Compliance Strategy

To have an effective compliance strategy, financial institutions need to use internal audits and risk assessments as such we tend to discuss  the risk assessments and internal audit usage in compliance strategy.

The most effective internal audit teams want to go beyond the conventional roles of monitoring controls, risk, and governance in their businesses if effective compliance strategy is being sought. Unfortunately, many financial institutions (FI’s) don’t realize the importance of these two tools and how they can work together to create a comprehensive plan.

This blog will discuss risk assessments and internal audit usage in compliance strategy and how they can help your business stay compliant.

Advantages of Risk Assessments and Internal Audit Usage in Compliance Strategy

An institution must regularly check its operating system and critical data to maintain security and stay in line with state, federal, and international laws.  Although risk assessments and internal audits are different processes with different requirements, an FI should use both to manage overall risk. A risk assessment methodology can cover a variety of areas such as the COSO framework. An internal audit scope can be prepared with the same risk factors in consideration and add related testing.

Enhanced Risk Management

The use of risk assessments and internal audits to ensure that the FI regularly assesses its compliance risks. A completed risk assessment allows the financial institution to have a complete picture of the compliance risk landscape and develop strategies to mitigate those risks.  In addition, the risk assessment can help reveal new findings that might not have been discovered using only one of the normal business processes.

Better Combined Assurance

There will still be some overlap between departments in many circumstances, but this does not have to cause issues. In fact, a comprehensive risk assessment will allow for the development of accurate internal audit scopes and focus can be on higher risk areas. Managing a FI’s audit scope, frequency and testing is critical to its overall success. 

Merged Focus

An organization’s goals and activities should be included to gain a more thorough knowledge of risks and improved oversight. Combined assurance helps to unify the goals and operations of the institution. This ensures that the executive committee, auditing team, and board understand the risk management efforts. It will also help create a clear picture of the compliance goals and intentions, eliminating or reducing confusion. 

Less Audit Overlap

Combining the two tools helps departments understand what pertinent staff is working on to avoid unnecessary overlap. In addition, evaluating staffing needs will save time and money while making audit findings easier to understand and remediate. Finally, effective risk assessments help shape the internal audit strategy used, which audits should be performed, and what audit products and services are required. 

Creating a Compliance Culture

Having both risk assessments and internal audits helps businesses build a culture of compliance. When employees see that the company is taking compliance seriously and making an effort to mitigate risks, they are more likely to follow the rules themselves. This can lead to a reduction in risk and improved compliance overall.


While using risk assessments and internal audits may seem like a lot of work, the benefits outweigh the cost.  When the FI have an effective compliance strategy in place, the FI can ensure that your business is protected from risks.

If the FI  and compliance team are struggling to combine risk assessment efforts and internal auditing, the FI could benefit by hiring the experienced team at RADD LLC to help you.

We can help the FI through the process and create results that can help the FI mitigate risk to your institution!