A risk based inspector assignment problem in the banking sector: A mathematical modeling approach

In recent years, the necessity of conducting branch audits in a systematic manner and by competent professionals has become a critical point of attention. In particular, placing additional emphasis on high risk branches stands out as one of the most crucial issues; in the absence of a systematic methodology, banks may face substantial financial losses, and restoring reputational damage can take many years while also imposing significant economic costs. Within this context, this study develops a mathematical model based on a risk-based internal auditing framework to improve the inspector to branch assignment process, which is currently conducted manually at X Bank. The primary objective of the study is to enhance audit effectiveness by assigning inspectors with varying levels of experience to branches with different risk profiles, to optimize the use of limited resources, and to ensure a fair distribution of workload among inspectors. The model solved using IBM ILOG CPLEX Optimization Studio and five year assignment schedules covering the period 2026-2030 are generated. The findings indicate that optimization based approaches are applicable to risk based audit planning and contribute significantly to the more effective management of audit resources.