Fundamentals of Integrated Risk Management Model in Business Processes

Abstract

Methodologies for identifying and measuring inherent and residual risk already exist for business risk management and business process management. Existing methodologies are in most cases descriptive, and the descriptions are based on subjective knowledge of business processes and internal control systems.

If the focus of managers and internal auditors, in creating and controlling business processes, thanks to risk management, is shifted from the past and present, the integrated model values the impact of inherent risks and measures the impact of internal control systems on its reduction is projected into a realistic future. Although it requires additional engagement in the analysis and forecasting of the financial and yield position, as well as the implemented system of internal controls in the business processes of the entities. The integrated business risk management model is simple and economical in its application. The aim of this paper is to show that the application of this Model, among other things, achieves a strategic approach to business risk management in accordance with the adopted strategic plan of the entity, primarily through the analysis of management processes. The result of the work is the development of a model that could be applied in any company, regardless of the activity and ownership structure.