logo-newlogo-newlogo-newlogo-new
  • Home
  • Blog
  • Audit Trail Academy
  • Advisory Services
  • Books
✕
  • Home
  • Chambers on Internal Audit
  • Uncategorized
  • The Challenges to Internal Audit in a Zettabyte World

The Challenges to Internal Audit in a Zettabyte World

Internal Auditors: If You See Something, Say Something
January 13, 2019
Being the Bearer of Bad News Is Never Easy for Internal Audit
January 28, 2019
January 20, 2019

Chambers The Challenges to Internal Audit in a Zettabyte World

The long-promised next generation of mobile connectivity, known as 5G, will soon be reality, with some experts predicting a quantum leap in the technology in as little as two years. Hans Vestberg, CEO of Verizon Communications, put the impact of 5G on the world in perspective when he spoke recently at the 2019 CES conference in Las Vegas. “5G will change everything,” he said.

The next generation of mobile technology will go a long way toward delivering on the promise of a fourth industrial revolution. The first industrial revolution was driven by steam and mechanization, the second by electricity, and the third by digitalization and computers. The fourth will be about connectivity.

The biggest impact of 5G will not be in faster download speeds; it will be in how 5G fuels a “connected everything” world. For example, the technology will enable a tenfold increase in the density of connected devices within a square kilometer, from 100,000 to 1 million. 

This is what makes 5G a transformative technology. It will increase the volume of data coming into organizations from billions of bytes of data, known as gigabytes, to trillions of gigabytes, known as zettabytes. Indeed, by 2020, it is estimated that there will be 50 billion connected devices generating 4.4 zettabytes of data. That would be a seismic increase from the .1 zettabyte generated in 2013.

It is hard to grasp the enormity of what 5G can mean to the volume of data that will be available to organizations. But it is easy to predict that organizations will try to leverage this powerful new business tool. And that creates a classic risk/opportunity conundrum. Collecting, analyzing, understanding, managing, protecting, and auditing today’s data already poses problems for many organizations. Imagine what it will be like when data streams expand exponentially. Cybersecurity challenges, already a significant concern for organizations, will grow as more data pours in. Complicating the issue further is the burgeoning global data privacy movement. Even in the most positive light, 5G will be a massive technological disruptor and require organizations to rethink how they gather, use, and protect data.

How will internal audit cope? Last year’s North American Pulse of Internal Audit report laid out four steps necessary for the profession to adapt and thrive in a technology-enabled world. Internal audit has to:

  • Become agile.
  • Pursue innovation.
  • Redefine its talent.
  • Inspire board engagement.

The coming 5G revolution makes the need for transformation even more urgent.

In a blog post about the Pulse report, I wrote: “Internal audit will be asked to do more, requiring us to pivot to stakeholder demands as we have done before. However, the pressures driving change and disruption today cannot be eased by simply relying on what we’ve done in the past.”

My blog post listed several actions audit leaders could take to help achieve the four transformative steps. However, nearly a year later, it appears we are making slow progress when it comes to redefining talent. An early peek at responses to the 2019 North American Pulse of Internal Audit survey, which will be released at The IIA’s General Audit Management Conference in March, suggests the profession continues to struggle with improving IT and cyber skills. What’s more, the average audit plan devotes less than 20 percent of its allocation to IT and cyber, according to the latest Pulse responses. Granted, transformation is a process that takes time, but time is running short.

Ironically, taming the 5G data tsunami will require internal audit to embrace technology unlike ever before. Artificial intelligence, robotics process automation, and other technologies offer the most obvious options for internal audit to cope with the disruption. Additionally, the profession will have to develop a very close — almost symbiotic — relationship with IT departments. Internal audit leaders must embrace this approach, and communicate their needs clearly and directly to stakeholders.

There are many actions internal audit should be taking to cope in a zettabyte world. One of the best calls to action for the profession was offered by Protiviti in its 2018 publication, “Analytics in Auditing is a Game Changer.” Protiviti challenged the profession to raise its game in embracing analytics and offered 10 analytics action items for chief audit executives and internal audit:

  1. “Recognize that the demand for data analytics in internal auditing is growing across all organizations and industries, and that the trend is certain to continue.”
  2. “Seek out opportunities to expand internal audit’s knowledge of sophisticated data analytics capabilities so that the function has a more comprehensive and precise understanding of what is possible with analytics.”
  3. Recognize that “resource constraints, along with business-as-usual workloads, can limit internal audit’s ability to optimize its data analytics efforts.”
  4. “Consider the use of champions to lead the analytics effort and, when appropriate, create a dedicated analytics function.” 
  5. “Explore avenues to expand internal audit’s access to quality data, and implement protocols … that govern the extraction of data used during the audit process.”
  6. “Identify new data sources, both internal and external, that can enhance internal audit’s view of risk across the organization.”
  7. “Increase the use and reach of continuous auditing and monitoring to perform activities such as monitoring fraud indicators, KRIs in operational processes, and information used in the leadership team’s strategic decision-making activities.”
  8. “Leveraging continuous auditing, develop real-time snapshots of the organization’s risks and incorporate results into a risk-based audit approach that is adaptable and flexible enough to focus on the highest areas of risk at any point in time.”
  9. “Seek ways to increase the level of input stakeholders provide when building and using continuous auditing tools and when determining what data should be monitored by these tools.”
  10. “Implement steps to measure the success of your data analytics efforts, and also consider the most effective ways to report success and value to management and other key stakeholders.”

In his 1921 acceptance speech, Nobel laureate Christian Lous Lange warned, “Technology is a useful servant but a dangerous master.” At the time, Lange was warning about the dangers technology posed in developing ever-more-powerful weapons. In this context, the warning still holds true, as we develop ever-more-powerful data-gathering technologies. 

As always, I look forward to your comments.

Share

Related posts

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
January 9, 2023

Follow the Leaders in 2023


Read more

Leave a Reply Cancel reply

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

What’s Trending

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?


01-09-23

Follow the Leaders in 2023


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