IRM et al (2002) defined risk as the combination of the chances of any event and its consequences taking place. In contrast, ICAEW (1999) described risk as impending or actual events that can minimize the probability of attaining firms? business objectives. This term also refers to the possibility of both gain and failure. Risk management and internal controls are vital ways adopted by businesses to maximize opportunities and minimize losses. Firms set operational and strategic objectives and aims to manage the risks that pose a threat to those objectives. Internal controls are used by firms to manage risks and raise their shareholders? value. These risks are usually managed by other third parties like insurance agencies.
The business environment is constantly evolving and henceforth different organizations must adopt risk management and internal control that are responsive to these constant changes in order to be successful with their businesses aims and objectives. The main role of internal control is to help manage and control the risks that cannot be completely eliminated. These types of management ensure the organizations to avoid any sort of possible risk they may face in their operations. Internal control systems of various organizations play a vital role in managing any type of risks that can hamper the operational and financial reporting as well as the objectives of the respective firms.
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