What is Risk Based Internal Audit ?

Risk Based Internal Audit (RBIA) is an audit methodology that links an organization's overall risk management framework and allows internal audit function to provide assurance to the board that risk management processes effectively, in line with risk appetite defined by the Bank. It classifies bank's risk rating as low, medium, high, very high etc. RBIA helps the Board and senior management obtain assurance that significant risks are being managed within acceptable limits. Thus, it improves governance, enhances control effectiveness, and supports proactive risk management in a bank. Suppose a bank identifies Corporate Lending as a high-risk area due to large loan sizes, rising NPAs, and frequent restructuring. Under RBIA, the Internal Audit team will prioritize this area for audit instead of following a routine schedule.