Overview – Trust Services Criteria
COSO’s CC9.1 for the component Risk Mitigation requires the following “The entity identifies, selects, and develops risk mitigation activities for risks arising from potential business disruptions.”
Points of Focus
Below are the points of focus and any related mappings to other frameworks and standards.
| Description | Mapping to other frameworks and standards |
| Considers Mitigation of Risks of Business Disruption — Risk mitigation activities include the development of planned policies, procedures, communications, and alternative processing solutions to respond to, mitigate, and recover from security events that disrupt business operations. Those policies and procedures include monitoring processes and information and communications to meet the entity’s objectives during response, mitigation, and recovery efforts. | · NIST CSF – PR.IP-9 – Response plans (Incident Response and Business Continuity) and recovery plans (Incident Recovery and Disaster Recovery) are in place and managed · NIST CSF – ID.SC-5 – Response and recovery planning and testing are conducted with critical suppliers/providers |
| Considers the Use of Insurance to Mitigate Financial Impact Risks — The risk management activities consider the use of insurance to offset the financial impact of loss events that would otherwise impair the ability of the entity to meet its objectives. |
What is the COSO Framework?
COSO means the Committee of Sponsoring Organizations of the Treadway Commission. It is a joint initiative of five private sector organizations and provides thought leadership through the development of frameworks and guidance on enterprise risk management, internal control, and fraud deterrence.
Source: https://us.aicpa.org/interestareas/businessindustryandgovernment/resources/riskmanagmentandinternalcontrol/coso-integrated-framework-project
The COSO Internal Control Framework was developed to help “organizations design and implement internal control in light of the many changes in business and operating environments.” The Treadway Commission designed the framework with SOX in mind, but the framework goes beyond financial reporting controls since it applies to operations, compliance, and reporting (both internal and external). For most public companies, the process of using the COSO Internal Control Framework is an exercise in mapping their SOX controls to the COSO Internal Control Framework and then evaluating the control environment in total against the framework.
The COSO Internal Control Framework is a comprehensive model comprising of the following five (5) integrated Components supported by seventeen (17) Principles. Below are the five (5) Components:
- Control Environment
- Risk Assessment
- Control Activities
- Information and Communication
- Monitoring
Source: https://www.auditboard.com/blog/difference-between-coso-and-sox/
Internal Control Categories
The COSO framework divides internal control objectives into three (3) categories: Operations, Reporting and Compliance.
- Operations objectives, such as performance goals and securing the organization’s assets against fraud, focus on the effectiveness and efficiency of your business operations.
- Reporting objectives, including both internal and external financial reporting as well as non-financial reporting, relate to transparency, timeliness and reliability of the organization’s reporting habits.
- Compliance objectives are internal control goals based around adhering to laws and regulations that the organization must comply with.
Source: https://www.i-sight.com/resources/coso-framework-what-it-is-and-how-to-use-it/