What is the difference between a risk assessment and a risk audit?

A risk assessment focuses on identifying potential risks that could affect an organization, evaluating the likelihood of those risks occurring, and understanding the potential impact they may have. The process typically involves recognizing vulnerabilities, threats, and potential consequences, leading to an overall evaluation of the risk landscape that an organization operates within.

On the other hand, a risk audit is a distinct process that assesses the effectiveness of the controls that have been implemented to mitigate those identified risks. It reviews existing policies, procedures, and practices to ensure that they are adequate and functioning as intended. Audits typically involve a systematic evaluation of how well risk management practices are being applied, which can include testing, monitoring compliance, and verifying that the organization’s risk mitigation efforts align with its risk assessment.

This distinction is crucial for organizations; understanding both processes allows them to identify risks and evaluate the controls in place, ensuring a proactive approach to risk management and enabling continuous improvement of their risk posture.