Internal auditors are facing a host of risks during the COVID-19 pandemic in business continuity, crisis management, cybersecurity and other areas, according to a new report.
The report, released Monday by the Institute of Internal Auditors, follows up on a similar report released last year, and discusses the top 11 risks facing organizations. For the report, the IIA surveyed members of corporate boards, executive management teams and chief audit executives.
The report found that 93 percent of CAEs rated business continuity/crisis management as highly or extremely relevant, compared to 87 percent of board members who ranked those risks as highly or extremely relevant. Far fewer members of the C-suite identified them that way, with only 63 percent describing business continuity/crisis management as highly or extremely relevant. Members of corporate boards and C-suites who responded to the survey rated their level of personal knowledge lowest when it comes to cybersecurity.
Christina Hupy is Vice President of HazardHub at Guidewire. Guidewire's HazardHub provides data, risk scores, and risk models to the P&C insurance industry.
Sam Deleo is director of content marketing for Tucker Advisors, a Colorado-based national marketing organization and leading wholesale distributor of annuities and life insurance products to top independent agents nationwide.
Whitney Parker Mitchell is Arizent's Interim Chief Marketing Officer, where she leads the marketing, product, and data teams in advancing the company's mission to deliver cutting-edge industry insights, elevate leaders, and build thriving communities.
With deep expertise in fintech, regtech, and cybersecurity, Whitney has driven innovation throughout her career in B2B marketing. As the Owner and Founder of Beacon, she transformed it from a solo venture into an award-winning B2B marketing agency with over 20 professionals, recognized on the Inc 5000 list for three consecutive years. Whitney's diverse career spans national security, tech startups, and global risk management, where she has guided over 200 firms on strategic marketing, branding, and lead generation.
She holds a Master's in International Relations focused on National Security from Syracuse University and a Bachelor's in Political Science from Boise State University.
Other risks discussed in the report include sustainability, disruptive innovation, economic and political volatility, third-party risks, board information, data governance, talent management, and culture.
“This is the second year we’ve done this survey,” said IIA president and CEO Richard Chambers. “The most revealing headline was that boards thought their organization was in a lot better position to address risk than management. That’s a little bit unsettling.”
This year, the COVID-19 pandemic exposed risks to business continuity and crisis management in particular. “The most revealing insight was that COVID and the aftermath is front and center in how management, boards and auditors are seeing risks in their organizations,” said Chambers. “Business continuity and crisis management are very high on their list of the key risks. Two years don’t make a trend, but it doesn't surprise me that there is closer alignment between management and auditors on the risks their companies are facing. When everybody is focusing on a looming storm, you’re more apt to have agreement. From that standpoint, COVID and the crisis we’re facing with the pandemic has allowed for management and auditors to see risks in much the same way.”
Talent management and innovation are seen as big risks by management. “Management has insights into the risks they face, but I also recognize that management isn’t always forthcoming about the risks they face because it could be a reflection on how well they’re managing,” said Chambers. “You can’t always get a candid assessment.”
That’s why it’s especially important for internal auditors to keep corporate boards informed about such risks. “I’ve always been one who believes that internal auditors can be the eyes and ears for the board when they’re not around,” said Chambers.
Cybersecurity has become even more of a risk for many companies with so many of their employees now working from home, with access to corporate systems available around the clock and few eyes watching other workers in their remote offices. Cybercriminals can also take advantage of the remote access if it’s not secured.
“When the workforce is distributed, people are working from home, and people are not as careful with the data they are sharing,” said Chambers. Cybersecurity also ranked high in last year’s survey, but he sees a clear correlation between COVID-19 and why cybersecurity risks are seen as even higher this year.
The IIA issued the report at a time when many internal audit teams are making their audit plans for next year. “We think it will be very revealing to them and a good source of information as they look at their own risks in their companies,” said Chambers.
