Conducting a Risk and Control Self-Assessment(RCSA) will identify 4 key challenges and risks that face an organization what are these and what are their importance?
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Conducting a Risk and Control Self-Assessment (RCSA) will identify 4 key challenges and risks that face an organization what are these and what are their importance?
RCSA (Risk Control Self Assessment) is an empowering method/process by which management and staff of all levels collectively identify and evaluate risks and associated controls. It adds value by increasing an operating unit’s involvement in designing and maintaining control and risk systems, identifying risk exposures and determining corrective action. The aim of RCSA is to integrate risk management practices and culture into the way staff undertake their jobs, and business units achieve their objectives. It provides a framework and tools for management and employees to:
- Identify and prioritize their business objectives
- Assess and manage high risk area of business processes
- Self-evaluate the adequacy of controls
- Develop risk treatment action plans
- Ensure that the identification, recognition and evaluation of business objectives and risks are consistent across all levels of the organization.
Once identified, assess whether the controls are working according to their original intention. The design of self-rating is to bring together all of the findings of the review and to provide senior management with concise feedback regarding the overall quality and status of the controls. Rate the overall quality of the control environment for each business line as satisfactory, needs improvement or unsatisfactory. After applying existing controls, assess the remaining levels of risk. The process must also identify appropriate risk owners who have responsibility for managing specific risks. The risk owners are responsible and accountable for determining whether the level of residual risk is acceptable, or whether there is a requirement for additional risk treatments.
The main objective of conducting a Risk and Control Self-Assessment is to ensure that all the processes of an organization can guarantee that the objectives of an organization are archived. This is done by identifying potential operational risks, monitoring all operational processes, and ensuring they are working efficiently. To ensure that a Risk and Control Self-assessment is effective its goals should be clearly defined and appropriate measures should be set up. Key challenges commonly identified when conducting a Risk and Control Self-Assessment include lack of qualified labor, lack of clearly defined organizational goals, poor implementation, and adoption of organizational policies and lack of transparent financial information.
Lack of qualified labor especially among senior management teams may result in poor decisions that may affect an organization short term and long term. Lack of qualified labor in various entities in an organization can lead to poor production methods. With unskilled labor, it would be difficult for an organization to come up with appropriate organizational goals. Without a clear organizational goal, it may be difficult for an organization to turn a profit (Kumar, 2020). Poor implementation and adoption of organization policies may lead to erosion of organizational culture. Besides that, there may be a lack of transparency in the organization especially in the availing of financial documents.
Identifying these challenges is important in helping an organization meet its organizational goals and ensuring that entities within the organization function effectively. It becomes easier for an organization to formulate its organizational goals and how they will archive them. Furthermore, it is easier to categorize each risk with an entity in the organization hence knowing where to remedy after conducting a Risk and Control Self-Assessment.
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