Who is responsible for overseeing the establishment and administration of risk within an organization?

The responsibility for overseeing the establishment and administration of risk within an organization typically falls to senior management. This group is tasked with defining the organization’s risk appetite, ensuring that there are appropriate policies and procedures in place to manage risks effectively, and communicating these policies throughout the organization. Senior management plays a vital role in the day-to-day operations and decision-making processes, allowing them to implement strategies that align with the organization's risk management framework.

While the board of directors provides oversight and sets the overall governance framework, it is senior management that is directly involved in the implementation of risk management initiatives. The risk management committee may assist in reviewing and recommending policies, but it is senior management that has the ultimate responsibility for ensuring that the risk management process is effectively integrated into the organization’s operations. Internal auditors play a critical role in evaluating and improving the risk management processes, but they do not oversee the establishment and administration of risks; rather, they assess the effectiveness of how these processes are handled by senior management.