Continuous Risk Monitoring and Assessment: New Component of Continuous Assurance

Abstract

ABSTRACTWe propose a methodology for Continuous Risk Monitoring and Assessment (CRMA). As a new component of Continuous Assurance (CA), CRMA converts static CA systems into dynamic and adaptable systems that respond to changes in audit risks from client business risks, thereby improving the relevance and robustness of CA systems to changes in client business risks and possible business failures. The present methodology proposes to develop relevant leading and lagging indicators to monitor and assess a client's business risks and recognize emerging business risks or harmful impacts of materialized business risks in near real time. To illustrate, we develop a lagging indicator of reputational damage measured from real time postings published in social media websites. We present two cases where the present lagging indicator is measured using public Twitter messages (“tweets”) and used to assess the potential reputational damage to two large corporations.