For organizations of all sizes, risk assessment and internal controls are essential for maintaining the integrity of data used in financial reporting and promoting operational efficiency.
As organizations plan for 2026, conducting regular reviews of internal controls and assessing current and potential risks can help improve operations, detect fraud, develop efficiencies, safeguard assets and information, and strengthen governance and compliance.
When risk assessment and internal controls work together, organizations can better understand where risk exists, how those risks may affect operations, and what policies or procedures should be used to address them. This creates a stronger foundation for reliable reporting, effective oversight, and informed decision-making.
Why Risk Assessment and Internal Controls Matter in 2026
Risk assessment and internal controls help organizations review internal operations, identify weaknesses, and respond to risks before they create larger problems. They also support financial reporting, operational efficiency, compliance, and accountability.
In 2026, organizations continue to face changing operational needs, technology expectations, reporting demands, and compliance responsibilities. These conditions make it important to review whether existing internal controls still fit the organization’s current processes and goals.
Risk assessments are a primary tool that enable organizations to review internal operations and policies to identify the risks they face. Timely and regular reviews of these policies allow organizations to act on those risks at any point in time.
These assessments also enable organizations to implement safeguards through internal controls. Internal controls are the policies and procedures that ensure an organization’s financial information is reliable, its operations are efficient, and it remains in compliance with laws and regulations.
These controls should be reviewed for efficiency, weaknesses, and opportunities for improvement. Organizations that need support strengthening internal processes, reporting, and advisory needs may also benefit from client accounting and advisory services.
How Risk Assessment and Internal Controls Work Together
Risk assessment and internal controls are closely connected. A risk assessment helps an organization identify, analyze, and understand risks, while internal controls help address those risks through specific policies and procedures.
For 2026 planning, this connection is especially important because organizations may need to review processes that have changed over time. Growth, staffing changes, technology updates, remote or hybrid work, and new reporting expectations can all affect how risks should be evaluated.
Without a risk assessment, an organization may not know which controls are most important. Without internal controls, the organization may identify risks but lack the structure needed to manage them.
Together, risk assessment and internal controls help organizations create a practical system for protecting assets, improving reporting, and supporting compliance. They also help leadership make better decisions by providing a clearer view of operational and financial risk.
Examples of Internal Controls
Examples of internal controls include segregation of duties, security measures, approval hierarchies, access limitations, secondary reviews, and account reconciliations. These controls can help detect errors or fraud in a timely manner, ensure proper approvals, limit unauthorized access, and promote transparency.
Each control supports a specific part of the organization’s broader risk management process. For example, approval hierarchies help ensure decisions receive the right level of review, while access limitations help protect sensitive data and reduce the chance of unauthorized activity.
Account reconciliations and secondary reviews can also help identify issues before they become larger problems. When these controls are used consistently, organizations are better positioned to protect assets, improve reporting, and support accountability.
As organizations enter 2026, these examples can be used as a starting point for reviewing whether controls are still operating effectively. A control that worked well in a prior year may need to be adjusted if systems, staff roles, transaction volume, or reporting needs have changed.
Establishing a Framework for Risk Assessment and Internal Controls
As a best practice, organizations should establish and maintain a framework that ensures day-to-day operations align with organizational goals. A common framework used is the COSO Framework, which serves as a foundation for integrity, ethical values, and a disciplined operational structure.
A framework gives organizations a structured way to evaluate risks, review controls, and monitor whether policies and procedures are working as intended. It can also help leadership and employees understand how their roles connect to the organization’s control environment.
For 2026, maintaining a framework can help organizations avoid treating risk assessment as a one-time exercise. Instead, the framework can support an ongoing process that changes as the organization’s risks, operations, and compliance needs change.
Deloitte provides additional perspective on how organizations can evaluate and strengthen effective internal controls, including the importance of governance, reporting, and control design.
Control Environment
Control Environment: The foundation of the organization’s culture, including integrity, ethical values, and accountability.
The control environment shapes how employees, management, and those charged with governance approach policies, procedures, and expectations. When integrity and accountability are emphasized, the organization can build a stronger foundation for internal control performance.
In 2026, a strong control environment should continue to support clear expectations, defined responsibilities, and consistent accountability. This helps ensure employees understand how their work connects to the organization’s broader control structure.
Risk Assessment
Risk Assessment: The process of identifying, analyzing, and managing current and anticipated risks that could threaten the achievement of objectives.
This process helps organizations understand which risks are most likely to affect operations, reporting, compliance, and oversight. Regular assessment also allows organizations to respond as risks change over time.
For 2026, risk assessment should consider both current and anticipated risks. This can help leadership identify where policies, procedures, documentation, or monitoring may need to be strengthened.
Control Activities
Control Activities: Policies and procedures that ensure management’s directives are carried out to mitigate risks.
These activities may include approvals, reviews, reconciliations, segregation of duties, and access restrictions. When designed properly, control activities help reduce risk and support consistent operations.
Control activities should be reviewed in 2026 to determine whether they still address the risks they were designed to manage. If operations have changed, the controls may need to be updated so they remain practical and effective.
Information and Communication
Information and Communication: Systems that identify, capture, and exchange information in a timely manner to support internal controls.
Strong communication helps ensure that employees understand their responsibilities and that leadership receives the information needed to make informed decisions. Timely information also supports effective monitoring and oversight.
In 2026, organizations should review whether information is being communicated clearly across departments, management, and governance teams. Effective communication can help prevent misunderstandings and support timely responses to risk.
Monitoring Activities
Monitoring Activities: Ongoing or separate evaluations used to assess the quality and effectiveness of internal control performance over time.
Monitoring helps organizations determine whether controls are operating as intended. It also helps identify weaknesses, gaps, or opportunities for improvement as operations and risks change.
For 2026, monitoring activities can help organizations determine whether controls are keeping pace with current conditions. Regular monitoring can also support better documentation and stronger oversight.
Building a Strong Control Environment
Risk assessment and internal controls are most effective when they are supported by a strong control environment. To build an effective control environment, an organization should plan the objectives and scope of the internal control system.
This first step helps define what the organization wants its control structure to accomplish and which processes should be reviewed. The organization should also evaluate and assess current processes and available documentation.
This review helps determine whether policies are clear, whether procedures are being followed, and whether documentation supports the organization’s reporting and compliance needs. After that review, the organization should develop remediation plans and recommendations for any control gaps identified.
The organization should also test the effectiveness of controls in addressing current and emerging risks.
- Plan the objectives and scope of the internal control system.
- Evaluate and assess current processes and available documentation.
- Develop remediation plans and recommendations for any control gaps identified.
- Test the effectiveness of controls in addressing current and emerging risks.
These steps remain relevant for 2026 because organizations should continue reviewing whether policies, procedures, and documentation match their current operating environment. Regular review can also help leadership identify where controls may be too weak, too informal, or no longer aligned with organizational goals.
McKinsey discusses the importance of reviewing operational risk, compliance, and controls, which aligns with the need to evaluate risk, strengthen processes, and support effective oversight.
Making Risk Assessment and Internal Controls Ongoing
Building this framework is not a one-time process; it should be ongoing and involve all levels of the organization, including employees, management, and those charged with governance.
Promoting and investing in an ethical tone at the top can shape the organization’s integrity and culture, while also ensuring employees understand their role in the control environment. This helps connect daily responsibilities with broader organizational goals.
When risk assessment and internal controls are treated as an ongoing process, organizations can respond more effectively to new risks, changing operations, and updated compliance expectations. Ongoing review also helps ensure that policies and procedures remain useful as the organization evolves.
For 2026, organizations should consider whether internal control review is part of regular management discussion rather than something addressed only when a problem occurs. Ongoing review can help organizations respond earlier and create stronger accountability.
Harvard Business Review also discusses how employees can play an important role in identifying and managing risk in its article on employees as risk managers. This perspective supports the importance of involving employees, management, and governance leaders in the control environment.
Working With Outside Advisors
While some organizations may lack the resources or experience to implement risk assessment and internal controls independently, it is encouraged to work both internally and with outside advisors and accountants.
External advisors can help tailor strategies, provide control and process recommendations, and offer insight into current industry trends based on the organization’s needs. Their outside perspective can help organizations identify control gaps, strengthen documentation, and improve risk assessment policies and procedures.
Establishing and maintaining these systems creates a structure that is both efficient and effective, supporting internal reporting, external audits, and overall oversight.
In 2026, outside advisors can help organizations review whether existing controls are properly designed, documented, and operating as intended. This support can be helpful when organizations are updating processes, preparing for audits, improving reporting, or responding to new risks.
Organizations that want to strengthen reporting, controls, and audit readiness may also benefit from audit and assurance services. These services can support the review of processes, documentation, and internal control performance.
For organizations seeking experienced support, the Bowers team has experience across various industries and has assisted numerous organizations in strengthening their control environments, including their risk assessment policies and procedures.
FAQ
These questions summarize the main points about risk assessment and internal controls in 2026, including why they matter, how they work together, and how organizations can maintain an effective control environment.
What are risk assessment and internal controls?
Risk assessment and internal controls are processes that help organizations identify risks and create policies and procedures to manage those risks. They support reliable financial reporting, efficient operations, compliance, and oversight.
Why are risk assessment and internal controls important in 2026?
Risk assessment and internal controls are important in 2026 because organizations must continue reviewing operations, reporting, compliance, technology, and governance needs. These processes help organizations detect fraud, safeguard assets and information, and strengthen accountability.
How do risk assessment and internal controls work together?
A risk assessment helps an organization identify and understand risks. Internal controls help address those risks through policies, procedures, approvals, reviews, access limitations, and monitoring.
What are examples of internal controls?
Examples of internal controls include segregation of duties, security measures, approval hierarchies, access limitations, secondary reviews, and account reconciliations.
How often should risk assessment and internal controls be reviewed?
Risk assessment and internal controls should be reviewed regularly. Timely and regular reviews help organizations identify weaknesses, respond to current and potential risks, and improve policies and procedures.
Can outside advisors help with risk assessment and internal controls?
Yes. External advisors can help tailor strategies, provide control and process recommendations, and offer insight into current industry trends based on the organization’s needs.