What is the primary role of the audit committee in risk management?

The primary role of the audit committee in risk management centers on overseeing financial reporting processes, particularly by facilitating audits and ensuring that the organization’s financial statements are accurate and comply with applicable regulations. This oversight function is crucial because the audit committee is responsible for monitoring the effectiveness of internal controls, engaging external auditors, and reviewing the financial reporting done by management. In this way, they help ensure that risk is managed effectively through transparent financial practices and thorough audits, thereby protecting the organization's integrity and financial health.

The other options do not align with the core responsibilities of an audit committee. Drafting financial statements is typically a management function, while conducting market research falls outside the purview of the audit committee's financial oversight duties. Similarly, handling employee grievances is generally a function of human resources or management, not the audit committee. Thus, the audit committee's role in risk management is primarily about overseeing and facilitating accurate financial reporting and audits.