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The purpose of this paper is to analyse company‐specific factors associated with adoption of risk‐based auditing. It seeks to explore the role of internal auditing in enterprise risk management (ERM).

Findings are drawn from a questionnaire survey, sent in 2006, to all 96 chief internal auditors who were members of the Institute of Portuguese Internal Auditors.

In planning an annual schedule of audits, the adoption of a risk‐based approach is statistically significant in international firms (p≤0.05) and companies listed on the Portuguese stock market (p≤0.10). There is a strong (but not significant) association between risk‐based annual audit planning and entities which are private, in the finance sector, and large. In planning each audit engagement, adoption of a risk‐based approach is correlated positively with entity size. Internal auditing is more proactive in the implementation of ERM in smaller organisations, and is more important in the finance industry and the private sector.

A better understanding emerges of factors associated with the adoption of risk‐based auditing, together with an enhanced appreciation of the role of internal auditing in ERM.

The paper reveals the specific characteristics of companies that are associated with the adoption of risk‐based approaches in the internal audit process. It is the first paper published about risk‐based internal auditing in Portugal.

Risk-based land-use planning is a major tool for reducing risks and enabling communities to design for and mitigate against natural hazard events. Moving towards a risk-based approach to land-use planning involves changes in planning and public communication practice for local government agencies. However, talking to people about how decisions made in the present may increase risk in the future is notoriously hard and requires carefully crafted public discussion. The paper aims to discuss these issues.

This paper explores the case of a local government planning agency (the Bay of Plenty Regional Council (BOPRC)) who adopted a risk-based approach to the development of their regional policy statement (RPS). The BOPRC designed an innovative approach to talking to their communities about future land use and acceptable risk based on a framework and toolkit of resources (the RBPA – risk-based planning approach).

The process addressed several common challenges of risk engagement for land-use planning as it: integrated input from policy and planning professionals, technical experts and community development specialists across local government organisations; used locally relevant community sessions that developed participants’ understanding of risk; linked ideas about risk tolerance to potential policy implications for local government; and built capacity amongst participants for judgment about risk acceptability and options for safeguard.

The process met public engagement planning criteria for robustness, i.e., valid process design and interpretation of feedback, and transparent integration into the final decisions. It enabled public views on natural hazards to be evaluated alongside technical input and incorporated into final decisions on thresholds for acceptable and unacceptable risk.

The approach taken has made significant contribution to risk engagement and land-use planning practice in New Zealand. In 2017, the BOPRC risk-based approach to their RPS received a national award from the New Zealand Planning Institute for contribution to advancing best practice. In 2018, it received further recognition through the Commonwealth Association of Planners Award for Outstanding Achievement in the Commonwealth.

This paper aims to explore the involvement of various actors in the preparation of Palu City's spatial plan before the multi-hazard events of 2018. In addition, it evaluates the extent to which disaster risk reduction (DRR) is mainstreamed in the spatial plan.

The study uses qualitative methods of analysis with a risk-based planning approach and stakeholder analysis.

It is critical that DRR is mainstreamed in spatial planning from the preparation to the implementation. Disasters can take place when there is a knowledge gap in the planning process. This results in developments in disaster-prone areas and even in high-risk areas. Therefore, mainstreaming DRR into spatial planning requires national guidelines that offer planners at the local level clear and detailed guidance on what they must prepare, consider and do in a risk-based spatial planning process.

Spatial planning that does not mainstream DRR can lead to catastrophic consequences in the form of casualties and losses when multi-hazards occur.

The study provides evidence-based findings on the importance of mainstreaming DRR into spatial planning, particularly in areas prone to multi-hazards, which can be optimized through a risk-based planning approach.

The purpose of this paper, which is a part of a PhD thesis, is to detect problems associated with the risk‐based approach to anti‐money laundering (AML), as well as present ways to improve the risk‐based approach.

The method is law and economics. The PhD thesis itself is also based on a comparative analysis of the Danish and British AML regimes.

The main findings are: failure to develop adequate risk‐based AML systems, taking into account varying levels of money laundering risk, is not only to be considered in the context of legal risk but also and more importantly in the context of integrity risk; anti‐money laundering (AML) has to be made part of financial and non‐financial institutions' corporate social responsibility policies; the Risk Analysis Manual provided by the Central Bank of The Netherlands lists very specific and comprehensive assessment criteria for a broad range of risks facing financial institutions. This manual could be considered by international bodies and individual financial institutions in informing their risk control; due to their intelligence access, cross‐national agreements of cooperation and exchange of information and contacts to multiple stakeholders, financial intelligence units are better placed in educating financial institutions on AML matters by means of regular typology publications and other guidance based on SARs and other intelligence; and AML considerations should be incorporated in other areas of law, such as immigration law concerning wealthy individuals, if the AML regime is to achieve its intended impact.

The paper highlights how the AML regime in general and the risk‐based approach in particular could be improved so as to meet concerns of both regulatory authorities and regulated entities.

Corrosion loop development is an integral part of the risk-based inspection (RBI) methodology. The corrosion loop approach allows a group of piping to be analyzed simultaneously, thus reducing non-value adding activities by eliminating repetitive degradation mechanism assessment for piping with similar operational and design characteristics. However, the development of the corrosion loop requires rigorous process that involves a considerable amount of engineering man-hours. Moreover, corrosion loop development process is a type of knowledge-intensive work that involves engineering judgement and intuition, causing the output to have high variability. The purpose of this paper is to reduce the amount of time and output variability of corrosion loop development process by utilizing machine learning and group technology method.

To achieve the research objectives, k-means clustering and non-hierarchical classification model are utilized to construct an algorithm that allows automation and a more effective and efficient corrosion loop development process. A case study is provided to demonstrate the functionality and performance of the corrosion loop development algorithm on an actual piping data set.

The results show that corrosion loops generated by the algorithm have lower variability and higher coherence than corrosion loops produced by manual work. Additionally, the utilization of the algorithm simplifies the corrosion loop development workflow, which potentially reduces the amount of time required to complete the development. The application of corrosion loop development algorithm is expected to generate a “leaner” overall RBI assessment process.

Although the algorithm allows a part of corrosion loop development workflow to be automated, it is still deemed as necessary to allow the incorporation of the engineer’s expertise, experience and intuition into the algorithm outputs in order to capture tacit knowledge and refine insights generated by the algorithm intelligence.

This study shows that the advancement of Big Data analytics and artificial intelligence can promote the substitution of machines for human labors to conduct highly complex tasks requiring high qualifications and cognitive skills, including inspection and maintenance management area.

This paper discusses the novel way of developing a corrosion loop. The development of corrosion loop is an integral part of the RBI methodology, but it has less attention among scholars in inspection and maintenance-related subjects.

The purpose of this paper is to examine, from the agency perspective, the influence of internal audit and audit committee attributes, as well as risk management and internal control systems, on the implementation of risk-based auditing among public-listed companies in Malaysia.

A questionnaire survey was distributed to the in-house internal audit function in approximately 620 public-listed companies. Consequently, data from 117 heads of the internal audit function was collected and analyzed.

The findings indicate that “audit committee review and concern” and “risk management system” are significantly and positively related to the implementation of risk-based auditing. Most importantly, the results indicate the importance of audit committee inputs and concerns in reviewing internal audit activities. Empirically, the findings also suggest that a more formalized risk environment would foster the existence of a strong risk-aware culture and hence provides a strong foundation for internal audit to implement risk-based auditing. However, internal audit experience, size of internal audit function, audit committee qualifications, and internal control system are not found to be significant predictors of the presence of risk-based auditing.

This study examined only risk-based auditing practices in the in-house internal audit function of public-listed companies; hence, the findings cannot be generalized to all Malaysian-listed companies that outsource or co-source their internal audit activities.

An effective internal monitoring mechanism and better quality of internal audit work will minimize potential risks that prevent the achievement of company objectives, reduce propensity to falsify financial information, and improve financial reporting quality.

This study contributes evidence concerning the relationship between internal monitoring mechanisms and the implementation of risk-based auditing among in-house internal audit activity.

Inspection and maintenance of plant and machinery has traditionally been based on prescriptive industry practices. However, increased experience and a greater understanding of operational hazards is leading sections of industry to take a more informed approach to planning inspection and maintenance, targeting resources to reduce the risk to as low as reasonably practicable. The purpose of this paper is to present an approach to asset management to minimize risks in the most cost effective way.

The approach shown optimizes run‐repair‐replace decision‐making in the integrity management of assets with the ultimate aim of maximising the impact of money spent on risk mitigation actions. The risk‐based approach, as opposed to the more conventional approaches, assesses failure in its wider context by considering not just the likelihood of failure, but also the consequences should the failure event occur.

The risk‐based methodology presents a cost‐effective way to minimise life cycle costs in the management of assets whilst maintaining reliability or availability targets, and operating within safety and environmental regulation.

In this paper, for demonstration, a wind turbine system consisting of a number of components including structural components is used. However, the methodology can be extended to any system in which components can be analyzed to provide the required inputs to the risk model.

At a time when competitive pressures force asset managers to prioritize their maintenance, the risk‐based methodology presented here is a rational, efficient and somewhat flexible way to asset integrity management.

The purpose of this paper is to develop a decision support tool for risk-based maintenance scheduling for a large heavily equipped gas sweetening unit in a Liquefied Natural Gas (LNG) plant. Two conflicting objectives, i.e., total maintenance cost and the reliability, are considered in the tool. The tool is tested with the real plant data and suggests several Pareto-optimal schedules for a decision maker to choose from. The financial impacts are assessed.

A bi-objective scheduling optimization model is developed for maintenance scheduling using a risk-based framework. The model is developed integrating genetic algorithm and simulation-based optimization to find Pareto-optimal schedules. The model delivered true Pareto front optimal solutions for given plant-specific data. The two conflicting objectives: the minimization of total expenditures incurred on maintenance-related activities and improving the total reliability are considered.

For large and complex processing facilities such as LNG plant, a shutdown of facility generates a significant financial impact, resulting in millions of dollars in production loss. The developed risk-based equipment selection strategy helps to minimize such an event of production loss by generating a thorough maintenance strategy for inspection, repair, overhaul or replacement schedule of the unit without initiating the shutdown. The proposed model has been successfully applied to obtain an optimize maintenance schedule for a gas sweetening unit.

A future work may consider the state-dependent models for various failure modes that will result in obtaining a better representation of the model. The proposed scheduling can further be extended to multi-criteria scheduling including availability, resource limitation and inflationary condition. A comparative analysis with other meta-heuristic techniques such as harmony search algorithm, tabu search, and simulated annealing will further help in confirming the schedule obtained from this application.

Maintenance scheduling using a conventional approach for special equipment generally does not consider the conflicting objectives. This research addresses this aspect using a bi-objective model. The usefulness of risk-based method is to assist in minimizing the financial and safety risk exposure to the operating companies, but some variation in results is expected due to varying risk matrix for different organizations.

Managing two objectives, i.e., minimizing the cost of maintenance-related activities, while at the same time maximizing the overall reliability dramatically, helps in mitigating adverse safety and financial risk due to fires, explosions, fatality and excessive maintenance cost.

Research develops a decision support tool for managing conflicting objectives for an LNG process. This research highlights the impact of utilizing the simulation-based approach coupled with risk-based equipment selection for complex processing unit or plant maintenance scheduling optimization.

Industry decision makers often rely on a risk-based approach to perform inspection and maintenance planning. According to the Risk-Based Inspection and Maintenance Procedure project for the European industry, risk has two main components: probability of failure (PoF) and consequence of failure (CoF). As one of these risk drivers, a more accurate estimation of the PoF will contribute to a more accurate risk assessment. Current methods to estimate the PoF are either time-based or founded on expert judgement. This paper suggests an approach that incorporates the proportional hazards model (PHM), which is a statistical procedure to estimate the risk of failure for a component subject to condition monitoring, into the risk-based inspection (RBI) methodology, so that the PoF estimation is enhanced to optimize inspection policies.

To achieve the overall goal of this paper, a case study applying the PHM to determine the PoF for the real-time condition data component is discussed. Due to a lack of published data for risk assessment at this stage of the research, the case study considered here uses failure data obtained from the simple but readily available Intelligent Maintenance Systems bearing data, to illustrate the methodology.

The benefit of incorporating PHM into the RBI approach is that PHM uses real-time condition data, allowing dynamic decision-making on inspection and maintenance planning. An additional advantage of the PHM is that where traditional techniques might not give an accurate estimation of the remaining useful life to plan inspection, the PHM method has the ability to consider the condition as well as the age of the component.

This paper is proposing the development of an approach to incorporate the PHM into an RBI methodology using bearing data to illustrate the methodology. The CoF estimation is not addressed in this paper.

This paper presents the benefits related to the use of PHM as an approach to optimize the PoF estimation, which drives to the optimal risk assessment, in comparison to the time-based approach.

Regulation imposes both direct and indirect costs. Regulators have to be conscious of these costs and the finite resources available to them. The paper outlines the way in which the Financial Services Authority (FSA) has developed a system of financial supervision under which resources are directed to those issues, firms and consumers which pose the greatest risks or opportunities when judged against its statutory objectives. The application of a risk‐based approach to supervision is effectively required by a number of principles of good regulation enshrined in legislation along with a requirement to undertake cost‐benefit analysis when devising new rules. As well as informing high‐level aims, the paper shows how the risk‐based approach, through the FSA’s planning and budget process and firm specific risk assessments, affects decisions on supervisory issues and resource allocation. It also outlines how the FSA will account to government for its performance.