The role of the internal auditor is expanding. No longer are internal auditors restricted to existing reporting tools and management practices, nor are they hired simply for compliance purposes. As risk is assessed through the lens of an organization’s business objectives and strategies, internal auditors are also responsible for defining potential threats and suggesting new operating models. This shift in strategic thinking not only addresses immediate concerns, but reflects a change in how internal auditors are perceived. To create a risk management plan that aligns with an organization’s core values, internal auditors can be valuable partners.
Internal auditors must address the changing environment.
Your internal auditor should be keenly adept at identifying emerging issues that can pose a risk to your organization. Relying on information based upon previously identified risks will only hinder the forward movement of your business objectives, and your internal auditor can assist in charting the impact that expanded operations could have on your risk management strategy. Growth or changes in company policy often leave gaps that are left unattended, which can be highlighted and amended before problems arise. Effectively regulating risk involves a preemptive strategy that acknowledges a changing environment.
Establish a plan for the unexpected.
Despite a strong risk management strategy, it is inevitable that your organization will experience surprises. However, an internal auditor can, at the very least, identify key issues that management may have not yet considered. Internal auditors, from an objective perspective, can propose how the latest technological trends could affect current business models, or how changes in a particular industry could affect regulatory practices. With this critical information, you can establish a better response strategy to handle the unknown when it finally becomes apparent.
Do employees within the organization properly understand risk?
The best risk management strategy depends upon a risk culture within the organization, a culture that demands a certain degree of regulation. Internal auditors provide a much-needed control, monitoring for risk outliers, such as reckless policy violations or unusual risk taking by employees. Management may also be struggling to understand gaps in risk management, implementing budget cuts that could cause inherent problems, or compensating in a manner that is producing negative results. Those within the organization may not realize that their actions are disruptive, and an internal auditor can assist in strengthening an appropriate risk culture
Monitor for fraudulent patterns.
Internal auditors are often called upon in response to existing fraudulent practices, after assets and other resources have already been lost. However, a partnership would allow your organization’s anti-fraud and corruption programs to be reviewed for efficiency. You will be able to understand the efficacy of your internal controls, and install stronger operating systems to identify specific patterns of potential fraud that require more attention.
You can risk underutilizing the expertise of your internal auditor when you call upon them only in the wake of a crisis. Your internal auditor, when considered a partner in risk management, can reduce risk considerably for your entire organization. An internal auditor can determine if your risk management strategy is in alignment with organizational goals, but they are also capable of developing robust risk management practices that can address current and future risks. Your internal auditor can prevent unnecessary headaches with a partnership that poses no threat.
