logo-newlogo-newlogo-newlogo-new
  • Home
  • Blog
  • Audit Trail Academy
  • Advisory Services
  • Books
✕
  • Home
  • Chambers on Internal Audit
  • Uncategorized
  • ​An Early Look at Internal Audit Priorities for 2019

​An Early Look at Internal Audit Priorities for 2019

When the SEC Speaks About Cybersecurity, We’d All Better Listen
November 12, 2018
When Executives Go Rogue — It’s Too Late to Point Fingers
November 26, 2018
November 19, 2018

Chambers An Early Look at Internal Audit Priorities for 2019

Like the speed of risk, the end of 2018 is approaching very rapidly. That means many of you are putting the finishing touches on your 2019 annual internal audit plan. I am sure that your process has been exhaustive, and you are preparing to present a plan for your audit committee that will reflect the risk-based priorities appropriate for your organization. However, before the ink dries on your plan, I thought you might find it useful to take an early look at the priorities your peers are planning to address in the year ahead.

Risk defines the world of the internal auditor. Ultimately, risk is what shapes our audit plans, directs our stakeholders, and determines our success or failure. That is why we spend so much time and effort helping our organizations identify, understand, and mitigate or leverage risks. Understanding the unique mix of risks our organizations face, and the risk appetites of our stakeholders, is crucial to internal audit adding value.

A number of organizations produce annual reports that attempt to peer at the horizon to identify risks in the coming year. Sometimes, it is easy to predict what those risks will be, as some major ones are long term, if not perpetual. The challenge is to identify or anticipate unexpected, emerging, or atypical risks that may mature in the coming weeks or months, in hopes of preparing to gird against them or use them to benefit the organization.

Two recently published reports, one from Gartner Inc. and the other from the European Confederation of Institutes of Internal Auditing (ECIIA), identify a familiar foe as the top risk for 2019: cybersecurity. Over the years, this challenge to organizations has consistently climbed up the risk hierarchy in annual reports. It also has opened our eyes to other risk categories, as our understanding of cyber becomes more sophisticated and our approaches to managing it mature.

Indeed, the focus on cybersecurity has helped us to understand that technology and data are inexorably intertwined, and it has increased our awareness of risk related to data governance and data privacy. It has driven us to be more cognizant of risks related to third-party relationships, IT governance, and culture.

For example, four of the top five risks in the Gartner report arguably stem from our focus on cybersecurity – cybersecurity preparedness, data privacy, data governance, and third-party risk. Risk in Focus 2019, the report developed and produced by the ECIIA, groups cybersecurity, IT governance, and third-party risks into one category. Another category in the ECIIA report is data protection and strategies in a post-GDPR world.

Data and technology also are central to risk discussions on digitalization, automation, and artificial intelligence. These discussions neatly demonstrate the challenge of balancing risk and opportunity. As the ECIIA report points out:

“The cost and efficiency benefits of automation and other digital processes can be transformative, if harnessed to their full potential. But organizations must also consider the risk associated with such transformation.”

Data collected since 2016 by The IIA in its annual Pulse of Internal Audit surveys reflect the same focus on cyber. The percentage of North American chief audit executives (CAEs) who rated cyber as a top risk to their organizations grew from 60 percent to 68 percent between 2016 and 2018. Over the same period, the percentage of CAEs rating IT as a top risk grew from 39 percent to 53 percent, and third-party relationships showed modest growth as well.

The Gartner report, which surveyed 144 CAEs, found two-thirds of respondents said they had experienced either a third-party-related disruption in the past two years or lacked sufficient knowledge of third-party activities to identify a disruption.

What is known is that third-party risks are growing more complex as digitalization, data sharing, and weak oversight of third-party relationships threaten to expose organizations to reputational harm.

It is easy to fixate on data- and technology-driven risks, but others certainly exist, as the two risk reports agree. Gartner identifies ethics and integrity as a risk that has evolved from culture risks identified in its 2018 report. The ECIIA report also identifies workplace culture as a risk.

In 2018, the #MeToo movement redefined how organizations see risks associated with sexual harassment and inequality in the workplace. While those two areas were known risk categories, the explosion of serious allegations against high-profile entertainment industry executives and the subsequent reputational damage to their organizations have significantly raised this risk level. The significant role of social media cannot be overstated. Here again, technology is influencing how we view risk.  

The Cambridge Analytica scandal provides another example. Facebook and its iconic founder, Mark Zuckerberg, suffered significant reputational damage for allowing the British company to mine personal information of millions of the service’s users. It also raised awareness of the ethical responsibilities associated with data protection and privacy that now is viewed as a significant risk in both the Gartner and ECIIA reports.

As we look toward 2019, the risk landscape will likely focus on cybersecurity, data governance and privacy, third-party risk, and the evolving hazards associated with technology’s impact on organizational ethics, culture, and integrity.

As you prepare your internal audit plans for the coming year, you should ensure that you have considered all of the risks facing your organization and discuss them with your audit committees and executive management. The list is by no means comprehensive or necessarily applicable to all organizations. However, it does provide a useful benchmark as you contemplate what may lie ahead in 2019.

As always, I look forward to your comments.

Share

Related posts

January 31, 2023

Recent Advice on Hiring Internal Auditor’s You Can ‘Trust’ Is Misdirected


Read more
January 24, 2023

Do Performance Bonuses Impair Internal Auditors’ Independence and Objectivity?


Read more
January 16, 2023

Are Internal Auditors to Blame When Boards Are in the Dark?


Read more

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What’s Trending

01-31-23

Recent Advice on Hiring Internal Auditor’s You Can ‘Trust’ Is Misdirected


01-24-23

Do Performance Bonuses Impair Internal Auditors’ Independence and Objectivity?


01-16-23

Are Internal Auditors to Blame When Boards Are in the Dark?


Read More

Archive

  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • February 2009

Contact Us

PO Box 1441
New Smyrna Beach, FL 32170

+1-407-463-9389
rchambers@richardchambers.com

About AuditBeacon.com

AuditBeacon.com is a resource center for internal auditors and risk professionals from around the world. In addition to more than 500 blogs authored by Richard Chambers, the site includes links to news and insights on internal audit and other information that illuminates the value of this important profession. AuditBeacon.com is provided as a service by Richard F. Chambers and Associates, LLC.

Copyright © 2023 Richard F. Chambers & Associates. All Rights Reserved.
  • Home
  • Blog
  • Audit Trail Academy
  • Advisory Services
  • Books