While we have been focused on mid-sized and larger organizations, internal controls are also important to smaller organizations. Many failures of community banks are due to breakdowns in internal controls, thus increasing operational risk. In smaller organizations, the segregation of duties and ability to hire expertise for specialized areas is more difficult.
But smaller organizations still must go through the process of assessing risks and controls and ensuring that they are appropriate for the culture and business mix of the organization. A faster growing financial services company in riskier lines of business will need a stronger, more formalized system of internal controls than a wellestablished company engaged broadly in traditional financial services.