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Risk management is the identification, evaluation, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.
Broadly speaking, a risk assessment is the combined effort of:
- identifying and analyzing potential (future) events that may negatively impact individuals, assets, and/or the environment ; and
- making judgments "on the tolerability of the risk on the basis of a risk analysis" while considering influencing factors.
An audit is an independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form. When such an examination is conducted with a view to express an opinion thereon" It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing has become such a ubiquitous phenomenon in the corporate and the public sector that academics have started identifying an "Audit Society". Auditors perceive and recognize the propositions before them for examination, obtain evidence, evaluate the same and formulate an opinion on the basis of their judgement which is communicated through their auditing report.
In computer security, a vulnerability is a weakness which can be exploited by a threat actor, such as an attacker, to perform unauthorized actions within a computer system. To exploit a vulnerability, an attacker must have at least one applicable tool or technique that can connect to a system weakness. In this frame, vulnerabilities are also known as the attack surface.
The 'Committee of Sponsoring Organizations of the Treadway Commission' ('COSO') is a joint initiative to combat corporate fraud. It was established in the United States by five private sector organizations, dedicated to guiding executive management and government entities in relevant aspects of organizational governance, business ethics, internal control, business risk management, fraud and financial reports. COSO has established a common internal control model against which companies and organizations can evaluate their control systems. COSO has the support of five support organizations: the Institute of Management Accountants (IMA), the American Accounting Association (AAA), the American Institute of Certified Public Accountants (AICPA), the Institute of Internal Auditors (IIA) and Financial Executives International (FEI).
Enterprise risk management (ERM) in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives, assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring process. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall.
Internal auditing is an independent, objective assurance and consulting activity designed to add value to and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Internal auditing achieves this by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity.
Risk Based Inspection (RBI) is an Optimal maintenance business process used to examine equipment such as pressure vessels, heat exchangers and piping in industrial plants. RBI is a decision-making methodology for optimizing inspection plans. The RBI concept lies in that the risk of failure can be assessed in relation to a level that is acceptable, and inspection and repair used to ensure that the level of risk is below that acceptance limit. It examines the Health, Safety and Environment (HSE) and business risk of ‘active’ and ‘potential’ Damage Mechanisms (DMs) to assess and rank failure probability and consequence. This ranking is used to optimize inspection intervals based on site-acceptable risk levels and operating limits, while mitigating risks as appropriate. RBI analysis can be qualitative, quantitative or semi-quantitative in nature.
Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization.
In financial auditing of public companies in the United States, SOX 404 top–down risk assessment (TDRA) is a financial risk assessment performed to comply with Section 404 of the Sarbanes-Oxley Act of 2002. The term is used by the U.S. Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC). The TDRA is used to determine the scope and required evidence to support management's testing of its internal controls under SOX404. It is also used by the external auditor to issue a formal opinion on the company's internal controls. However, as a result of the passage of Auditing Standard No. 5, which the SEC has since approved, external auditors are no longer required to provide an opinion on management's assessment of its own internal controls.
Fraud deterrence has gained public recognition and spotlight since the 2002 inception of the Sarbanes-Oxley Act. Of the many reforms enacted through Sarbanes-Oxley, one major goal was to regain public confidence in the reliability of financial markets in the wake of corporate scandals such as Enron, WorldCom and Waste Management. Section 404 of Sarbanes Oxley mandated that public companies have an independent Audit of internal controls over financial reporting. In essence, the intent of the U.S. Congress in passing the Sarbanes Oxley Act was attempting to proactively deter financial misrepresentation (Fraud) in order to ensure more accurate financial reporting to increase investor confidence. This same concept is applied in the discussion of fraud deterrence.
Information technology risk, IT risk, IT-related risk, or cyber risk is any risk related to information technology. While information has long been appreciated as a valuable and important asset, the rise of the knowledge economy and the Digital Revolution has led to organizations becoming increasingly dependent on information, information processing and especially IT. Various events or incidents that compromise IT in some way can therefore cause adverse impacts on the organization's business processes or mission, ranging from inconsequential to catastrophic in scale.
Risk appetite is the level of risk that an organization is prepared to accept in pursuit of its objectives, before action is deemed necessary to reduce the risk. It represents a balance between the potential benefits of innovation and the threats, that change inevitably brings. The ISO 31000 risk management standard refers to risk appetite as the "Amount and type of risk that an organization is prepared to pursue, retain or take". This concept helps guide an organization's approach to risk and risk management.
Entity-level controls are internal controls that help to ensure that management directives pertaining to the entire entity are carried out. They are the second level of a top-down approach to understanding the risks of an organization. Generally, entity refers to the entire company.
Risk is the potential for uncontrolled loss of something of value. Values can be gained or lost when taking risk resulting from a given action or inaction, foreseen or unforeseen. Risk can also be defined as the intentional interaction with uncertainty. Uncertainty is a potential, unpredictable, and uncontrollable outcome; risk is an aspect of action taken in spite of uncertainty.
ISO 26262, titled "Road vehicles – Functional safety", is an international standard for functional safety of electrical and/or electronic systems in production automobiles defined by the International Organization for Standardization (ISO) in 2011.
The chief audit executive (CAE), director of audit, director of internal audit, auditor general, or controller general is a high level independent corporate executive with overall responsibility for internal audit.
In computer security, a threat is a possible danger that might exploit a vulnerability to breach security and therefore cause possible harm.
IT Risk Management is the application of risk management methods to information technology in order to manage IT risk, i.e.:
ISO 22300:2018, Security and resilience – Vocabulary, is an international standard developed by ISO/TC 292 Security and resilience. This document defines terms used in security and resilience standards and includes 277 terms and definitions. This edition was published in the beginning of 2018 and replaces the first edition from 2012.