Financial control risk covers a wide range of financial disciplines and processes that collectively aim to ensure that your business follows good practices in the critical area of financial discipline.
This risk arises from a lack of or a breakdown in financial controls and processes e.g. budgetary and expenditure controls, segregation of duties. It can emanate from HR/People, weak operational controls, poor debt/credit extension and crime risks.
The risk results in financial loss and a weakening of the balance sheet as well as reputational damage.
It will force you to consider ALL areas of financial controls, even those you may not think of or consider important and will identify the areas that most expose your business to loss. A lack of financial controls is probably the most common reason for businesses to fail.
The management of financial control risk will ensure that the business is better equipped to manage its finances and financial processes ensuring financial stability and sustainability. This will also improve its position as a counterparty for credit extension, contracts and as a supplier.