Internal Environment
The internal environment includes the culture and spirit of the organization. It sets the basis for how risk is viewed and addressed by all entity co-workers, particularly risk management philosophy and risk appetite, integrity and ethical values, and the environment in which the organization operates.
At this stage it is possible to take an inventory of:
• the list of strategic objectives of the organization and the associated requirements
Objectives must exist before management can identify the events that may affect their achievement. Risk management ensures that objectives are in line with the mission of the organization and its risk appetite.
• What exists in the enterprise (organizational chart, processes, management rules, ,control systems, responsibilities, applications, infrastructures)
Defining the internal environment ensures that risk management acknowledges the major objectives of the organization.