Want to better manage risk?

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As a former practitioner and manager of internal audit, Dave Richards, the President of The Institute of Internal Auditors (www.theiia.org) brings a great deal of experience and first-hand knowledge to the subject of managing risk.  According to Dave, and others I’ve spoken with recently, the three areas to focus on to reduce risk include:
Senior management involvement
Managing fraud
Managing technology
The gist of the discussions around the importance of management focus and involvement are that if senior managers do not encourage a culture of ethics and compliance within the organization, then risk from all sources increase, with outcomes ranging from miniscule to really big-headaches.Managing fraud is about planning for the inevitable.  Despite the best of intentions, management support, controls and assessments, people are always going to figure out how to beat the system.  Planning ahead for the really big outcomes, likely scenarios and predictable events needs to be complemented with agility and the ability to respond rapidly.  Whether due to internal or external sources, some of the new ways in which fraud is occurring are covered at www.fraudwar.blogspot.com.Paying careful attention to how fraud is committed through the use, and misuse, of technology is more important today than it was last year, two-, five-, and ten- years ago.  But you shouldn’t assume that all uses of technology are identically available to fraudsters.  When was the last time you used a cell phone, a spreadsheet, a website, a laptop, a telephone, a facsimile machine, a credit report, a bank statement, an electric typewriter, a money order, issued an invoice or reviewed a purchase order?  Do you know how these are being used to commit fraud today?  Do you know how these, and different technology-assisted successors to these are being used to commit fraud today? 

What do you think?
Are other factors more important than these three?

Jim Hurley

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