The Contribution of internal Audit to Mitigate the Liquidity Risk of Private Companies

Abstract

This thesis explores the role of internal auditing in mitigating liquidity risk, with a focus on companies in Luxembourg. Given the crucial role of financial liquidity in preventing insolvency and ensuring business stability, the study examines how internal audits as part of Enterprise Risk Management (ERM) improve liquidity risk management. Combining a literature review with qualitative interviews of internal auditors, the research assesses the extent to which internal auditing controls liquidity risk and improves corporate performance. The findings demonstrate that internal auditors add value by optimizing resource allocation, strengthening risk detection, and reinforcing governance frameworks. Ultimately, this study underscores the strategic significance of internal auditing in safeguarding financial stability and promoting effective risk management practices.