The risk management process should be a search that it supports best practice of this governance. Do you ever realise how the board knows that the executives and business managers are either living up to the both stated intentions or not?
The solution to this lies in the bank audit function and the periodic investigations it carries out across the bank. The key role of the audit function is to provide an independent assessment of the design and implementation of the bank's risk management. Regulators required that internal auditors should exam in the integrity of the management information system and Independence accuracy and completeness of position data. Objective of audit function should be to evaluate the design and conceptual soundness of the risk measures. Internal auditor should verify the accuracy of models through an examination of the back-testing process.
Order should also evaluate the soundness of elements of the risk management information, also called as MIS such as the processes used for coding and implementation of internal models.
Responsibilities of an include providing Assurance as to the design and conceptual soundness of the financial rates database that is used to generate parameters entered into the market VaR analytic engines. Audit also reviews the adequacy and effectiveness of the procedures for monitoring risk, plans to upgrade risk management systems, effectiveness of application controls within the risk MIS, and the reliability of the waiting process.
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Also Read- How do I prepare for CA Intermediate Audit?