What is a Governance & Risk Management Audit in the capital market context?

It’s a thorough review of a firm’s governance structures, risk frameworks, internal controls, oversight and reporting lines to ensure these are effectively designed and operating in line with regulatory requirements and best practices.

Why is board oversight and governance structure important?

Because strong governance ensures accountability, clear roles & responsibilities, proper oversight of management, risk escalation mechanisms, and that decisions are made with risk in mind, which helps reduce legal/regulatory and reputational risk.

What does risk framework assessment involve?

It involves identifying the risks the firm faces (regulatory, operational, financial, reputational), assessing how they are measured or quantified, how risk mitigation is implemented, monitored, and how residual risks are overseen.

How are internal controls and process testing done in this audit?

Internal controls and process testing might involve sampling, reviewing process flows, testing access permissions, verifying that approvals are being done, examining segregation of duties, and that control mechanisms respond as intended.

What is the purpose of escalation & reporting review?

To ensure that when issues are identified (e.g. non-compliance, control failures, unusual incidents), they are escalated properly and in a timely manner to senior management or the board, with clear reporting lines and accountability.

What happens after gaps are found in governance or risk management?

After gaps are identified, the audit report will typically include recommendations, a remediation roadmap with timelines and responsibilities, and follow-up verification to confirm that improvements have been implemented.

Governance & Risk Audit | Capital Market Compliance

Purpose

To provide independent assurance that the organization’s governance structures and risk management systems are effective, transparent, and consistently aligned with strategic objectives, thereby enabling sustainable growth and regulatory compliance

Scope

Board Oversight & Accountability

Evaluate the composition, independence, and expertise of board members.
Assess the clarity of roles and responsibilities for the board, committees (e.g., audit, risk, compliance), and senior management.
Review board meeting frequency, attendance, and quality of decision-making.
Verify existence and effectiveness of policies on conflicts of interest, board evaluation, and succession planning.

Risk Identification, Assessment & Mitigation

Assess processes for identifying risks across strategic, operational, financial, compliance, and reputational categories.
Review risk assessment methodologies (qualitative and quantitative), including risk scoring and prioritization.
Evaluate the design and implementation of risk mitigation plans and controls.
Examine risk monitoring and reporting frameworks, including escalation mechanisms and risk appetite definitions

Regulatory Compliance & Reporting

Review systems to ensure compliance with applicable laws, regulations, and internal policies.
Evaluate the effectiveness of compliance monitoring, incident reporting, and corrective action processes.
Assess the accuracy and timeliness of regulatory filings and disclosures
Analyze the role of compliance functions and their independence from operational units

Ethical Standards & Corporate Culture

Assess the existence and communication of codes of conduct, ethics policies, and whistleblowing mechanisms.
Evaluate the effectiveness of training programs on ethics and compliance.
Review mechanisms for detecting and addressing unethical behavior or misconduct.
Analyze the alignment of corporate culture with stated values and governance principles.

Methodology

Document Review: Policies, charters, minutes, risk registers, compliance reports, training records.
Interviews: Board members, senior executives, risk managers, compliance officers, and key operational personnel.
Observation: Board meetings, risk committee sessions, training activities.
Testing: Sample transactions, risk control effectiveness, compliance incident investigations.
Benchmarking: Comparison against industry best practices and regulatory requirements.

Deliverables

Detailed audit report with findings, risk ratings, and management responses.
Recommendations for enhancing governance practices and risk controls.
Action plans to address identified gaps and improve risk culture.
Follow-up schedule for reassessment and continuous improvement.

Benefits

Strengthened governance frameworks supporting transparent, accountable decision-making
Proactive risk management minimizing exposure to operational, financial, and reputational threats.
Robust compliance ensuring adherence to regulatory obligations and reducing penalties.
Cultivation of ethical corporate culture promoting integrity, trust, and sustainable growth.
Enhanced confidence from investors, regulators, employees, and other stakeholders.

ABM Governance & Risk Management Audit services

Strong governance and effective risk management are the cornerstones of sustainable business operations. ABM Global Compliance supports your organization by:

Evaluating Governance Frameworks: We review the roles and responsibilities of your board, committees, and management to ensure clear accountability and oversight.
Policy and Procedure Review: We examine your governance policies, codes of conduct, and compliance programs for alignment with best practices
Risk Identification and Assessment: We assist in mapping out strategic, operational, financial, and compliance risks to develop a comprehensive risk profile.
Risk Mitigation Effectiveness: Our audit tests the controls and mitigation strategies in place, identifying areas for improvement.
Culture and Ethical Environment: We assess the tone at the top and the ethical climate to promote integrity and transparency throughout your organization.