How do you identify risks when you can’t rely on 2nd line work?

Uncovering Risks Without Relying on Internal Frameworks: A Guide for Auditors

Hello fellow auditors,

Navigating the complexities of risk identification during an Audit can be particularly challenging when you’re unable to depend on existing internal control or risk management frameworks. So how do we pinpoint risks effectively in such scenarios?

Take, for example, the task of auditing the “Recruiting” process. Our mission would include detailing the core activities of the recruitment team by examining current procedures and policies. From there, we assess the potential risks linked with each activity.

Example Activity: Screening Resumes

Potential Risks:

Hiring an Unqualified Candidate: The recruitment process may mistakenly favor candidates who don’t fit the role’s requirements.
Missing Out on a Suitable Candidate: Valuable prospects might be unintentionally overlooked during the screening phase.

Expected Control Measures:

To mitigate these risks, implementing a structured review process is essential. For instance, incorporating a secondary validation step by an additional recruiter can enhance the integrity of the selection process.

Is This the Right Approach?

This method of mapping activities to identify risks has its merits, but it raises the question: is this the best practice for everyone? Do you initiate your assessments by outlining activities, or do you prefer a different strategy?

Engage with us in the comments below and share your insights or alternative practices for identifying risks without relying on pre-existing frameworks. Together, we can refine our approach to risk assessment and strengthen our Audit processes.

Looking forward to your thoughts and experiences!

Warm regards,

[Your Name]

Identifying risks without reliance on established internal control or risk management frameworks can indeed be more challenging, but it also provides an opportunity to approach the Audit with fresh perspectives and innovative methodologies. Here’s a structured way to identify risks in such scenarios, using your example of the recruitment process.

1. Understand the Process Thoroughly

Begin with a comprehensive understanding of the recruitment process. This involves:

Interviews and Observations: Conduct interviews with key personnel involved in the recruiting process to gather insights about how each step is performed. Observing the process in action can also provide valuable on-the-ground information.
Process Mapping: Create a visual map of the entire recruitment process from job posting to onboarding. This helps in identifying each critical step and any potential gaps or overlaps.

2. Harness External Frameworks and Benchmarks

While internal frameworks might not be available, industry benchmarks and external best practices can guide the risk identification process:

Industry Standards: Utilize industry standards such as ISO 30405:2016 which provides guidelines on recruitment to understand common risks and controls implemented by peers.
Benchmarking: Compare the processes against industry leaders or best practices to identify potential areas of risk.

3. Engage with Stakeholders

Actively engage with stakeholders throughout the recruitment process:

Workshops and Brainstorming Sessions: Facilitate workshops with stakeholders to brainstorm and surface potential risks. This collective approach can uncover risks that might not be immediately obvious.

4. Analyze Data and Trends

Dive into data analysis to extract trends and anomalies:

Historical Data Analysis: Examine past recruitment outcomes to identify trends indicative of risk, such as high turnover rates or poor job performance.
KPIs and Metrics: Use key performance indicators (KPIs) specifically related to recruitment, like time-to-hire or candidate satisfaction scores, as they might highlight areas where risks are more likely to materialize.

5. Scenario Planning and Case Studies

Risk identification can also benefit from scenario planning:

Hypothetical Scenarios: Create hypothetical scenarios around potential risks, such as hiring biases or failure to comply with legal requirements, and assess their impact on the organization.
Case Studies: Review case studies of recruitment-related failures or successful transformations in other organizations to glean potential risks and successful mitigation strategies.

6. Leverage Technology and Tools

Utilize technological solutions to enhance risk identification:

**Data Analytics

One response

APAdmin

4 March 2025 at 12:42 PM
Identifying risks without reliance on established internal control or risk management frameworks can indeed be more challenging, but it also provides an opportunity to approach the Audit with fresh perspectives and innovative methodologies. Here’s a structured way to identify risks in such scenarios, using your example of the recruitment process.

1. Understand the Process Thoroughly

Begin with a comprehensive understanding of the recruitment process. This involves:
- Interviews and Observations: Conduct interviews with key personnel involved in the recruiting process to gather insights about how each step is performed. Observing the process in action can also provide valuable on-the-ground information.
- Process Mapping: Create a visual map of the entire recruitment process from job posting to onboarding. This helps in identifying each critical step and any potential gaps or overlaps.
2. Harness External Frameworks and Benchmarks

While internal frameworks might not be available, industry benchmarks and external best practices can guide the risk identification process:
- Industry Standards: Utilize industry standards such as ISO 30405:2016 which provides guidelines on recruitment to understand common risks and controls implemented by peers.
- Benchmarking: Compare the processes against industry leaders or best practices to identify potential areas of risk.
3. Engage with Stakeholders

Actively engage with stakeholders throughout the recruitment process:
- Workshops and Brainstorming Sessions: Facilitate workshops with stakeholders to brainstorm and surface potential risks. This collective approach can uncover risks that might not be immediately obvious.
4. Analyze Data and Trends

Dive into data analysis to extract trends and anomalies:
- Historical Data Analysis: Examine past recruitment outcomes to identify trends indicative of risk, such as high turnover rates or poor job performance.
- KPIs and Metrics: Use key performance indicators (KPIs) specifically related to recruitment, like time-to-hire or candidate satisfaction scores, as they might highlight areas where risks are more likely to materialize.
5. Scenario Planning and Case Studies

Risk identification can also benefit from scenario planning:
- Hypothetical Scenarios: Create hypothetical scenarios around potential risks, such as hiring biases or failure to comply with legal requirements, and assess their impact on the organization.
- Case Studies: Review case studies of recruitment-related failures or successful transformations in other organizations to glean potential risks and successful mitigation strategies.
6. Leverage Technology and Tools

Utilize technological solutions to enhance risk identification:
- **Data Analytics
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