Risk Audit Matrix for Internal Bank Audit

Objective:

To systematically identify, evaluate, and prioritize risks within the bank's operations to
enhance risk management and internal controls.

1. Risk Identification:

Identify potential risks associated with various banking processes and operations.

Risk ID Risk Description Department/Area Process/Function

1 Cash handling discrepancies Branch Operations Cash Replenishment
2 Unauthorized transactions IT Department Transaction Processing
3 Data breaches Information Security Data Management
4 Non-compliance with AML Compliance Department AML Procedures
5 Loan defaults Credit Department Loan Approval Process

2. Risk Assessment:

Assess the likelihood and impact of each identified risk. Use a standardized rating system
(e.g., High, Medium, Low).

Risk ID Risk Description Likelihood Impact Risk Rating

1 Cash handling discrepancies Medium High High
2 Unauthorized transactions Medium Medium Medium
3 Data breaches Low High Medium
4 Non-compliance with AML Medium High High
5 Loan defaults High High High

3. Control Evaluation:

Evaluate existing controls and their effectiveness in mitigating risks.

Risk Control Effectiveness (Effective, Moderate,

Existing Controls
ID Weak)
1 Dual verification during cash handling Effective
2 Multi-factor authentication Moderate
3 Firewalls and encryption Effective
Regular KYC updates and transaction
4 Moderate
monitoring
5 Credit scoring and risk assessment Moderate

4. Risk Mitigation Plan:

Develop strategies and action plans to mitigate risks. Assign responsibilities and set
deadlines.

Risk Responsible
Mitigation Plan Deadline
ID Department/Person
Implement automated cash handling systems and
1 Branch Operations Manager 30/11/2023
regular audits
Upgrade to advanced authentication systems and
2 IT Security Head 15/11/2023
conduct regular security training
Conduct regular security audits and update Information Security
3 30/12/2023
encryption protocols Department
Enhance KYC processes and increase frequency of
4 Compliance Officer 31/10/2023
AML compliance training
Strengthen credit policies and introduce rigorous
5 Head of Credit Department 20/12/2023
loan monitoring mechanisms

5. Monitoring and Review:

Establish procedures for ongoing monitoring and periodic review of risk mitigation efforts.

Risk ID Monitoring Activity Frequency Next Review Date

1 Quarterly cash handling audits Quarterly 31/12/2023
2 Monthly security system review Monthly 30/11/2023
3 Semi-annual IT security audit Semi-annually 30/06/2024
4 Monthly AML compliance check Monthly 30/11/2023
5 Quarterly loan performance review Quarterly 31/12/2023

Key Definitions
1. Risk ID: Unique identifier for each risk.
2. Risk Description: Brief description of the identified risk.
3. Likelihood: The probability of the risk occurring.
4. Impact: The potential consequence if the risk occurs.
5. Risk Rating: Combined evaluation of likelihood and impact.
6. Existing Controls: Current measures in place to mitigate the risk.
7. Control Effectiveness: Assessment of how well current controls mitigate the risk.
8. Mitigation Plan: Actions to further reduce or eliminate the risk.
9. Responsible Department/Person: Entity accountable for implementing the
mitigation plan.
10. Monitoring Activity: Ongoing checks to ensure risk mitigation measures are
effective.
11. Frequency: How often the monitoring activity is conducted.
12. Next Review Date: The next scheduled date to review risk mitigation efforts.

This Risk Audit Matrix can be tailored to the specific needs and operations of your bank,
ensuring a structured and systematic approach to risk management during internal audits.