This is a very crucial period for organizations and individuals who are involved in the risk assessment process, particularly internal auditors, who have an extremely busy schedule. The pandemic outbreak and its destabilizing consequences caught almost every organization by surprise, where businesses across the globe have started to reconsider the risk management framework.
Midway through 2022, businesses are focusing on the long term and trying to have a better understanding of the internal audit risks they will likely be taking in the near future. Let’s now look at the top eight significant internal audit risk areas that companies should address in the upcoming years.
Cyber Attacks & Frauds
The complexity and frequency of cyber security breaches and fraud are rising as a result of technological advancements. Additionally, the widespread adoption of home-based work arrangements quickly enhanced an organization’s susceptibility to cyberattacks.
Supply Chain Management
Undoubtedly, supply chain management has emerged as a major risk. Connections with third parties are altering as a result of the pandemic’s disruption of many organizations’ supply chains and business service structures. As a result, managing the supply chain has grown to represent a huge risk for enterprises.
Data & Analytics
The collection and handling of data is advancing quite quickly. Organizations and internal auditors must recognise the opportunities and risks of incorporating these digital solutions into their company’s operations and strategy as the use of data and analytics becomes increasingly important.
Regulatory change is another constant on the list of top risks. New regulatory standards are usually introduced in organizations across all sectors. Organizational governance and internal control are becoming more complicated as a result of these new regulations, which also put increasing demand on top executives.
Employee Management & Retention
The challenge of acquiring employees has been a significant risk that has been ongoing, and internal audit personnel are no exception. Employees were compelled to reevaluate their goals as a result of the pandemic, and some decided they wanted to change into different fields. We are expecting the competition to be severe in the coming years as firms attempt to employ more internal auditors from perhaps a shrinking pool of applicants.
The possibility of more pandemic surges, not to forget other probable outbreaks that pursue the same quick spread route, will require an overhaul to emergency management and preparation for businesses to strictly follow in order to survive in this demanding business environment.
Digital Breakthroughs & Automation
One of the major breakthroughs that will propel businesses in the future is robotic process automation (RPA), which combines artificial intelligence, algorithms, and machine learning. Digitalization eventually introduces new risks and concerns in this digital world as it tends to upset corporate operations, activities, and business strategies.
In the upcoming years, risk areas related to environmental, social, and governance (ESG) themes and reporting on these concerns are projected to increase. Matters related to climate change are among the dangers that worry all organizations. Internal Audit is becoming more aware of the difficulties and hazards businesses face in reducing their impact on climate change.
Without a doubt, the evolving business environment is laying the groundwork for a new corporate normal in the years to come. Emerging risks are brought on by technological advancements and other trends, which Internal Audit should address while not ignoring important existing hazards. As a result, we anticipate that the aforementioned risk categories will gain attention in the near future and organizations need to be equipped for anything.