However, as complexity and disruption increase in the business, Internal Audit will need to have a much bigger advisory role to sustain stakeholder trust in organizations. It will need to provide broader insights on all the risks that an organization faces. These are not just the preventable downside risks that have traditionally fallen within its remit, but also the upside risks that management should be exploring such as innovation, and the outside risks that are on the horizon, such as demographic shifts, climate change and globalization.
In the future, the word “assurance” will take on a new meaning. It will not just be about providing comfort around financial and operational risks. Instead, management will expect that Internal Audit provide assurance over the management of risks that the function was never asked to consider in the past. So how does Internal Audit keep pace with this business transformation and maintain its position as trust custodian?
The answer to that question is that Internal Audit can no longer transform itself in minor increments the way it has done in the past. It needs to go through a holistic and planned transformation – one that positively disrupts the entire life cycle of Internal Audit and its surrounding operating environment. Functions must become more data-driven, make more use of emerging technologies, have more dynamic processes and draw on a more flexible people model. Throughout the phases of the transformation journey, strategies for talent, processes and technology should be challenged concurrently to design a disruption that makes sense for the entire environment.
Of course, it is unrealistic to expect the holistic change in one big bang – but even getting started has been a challenge for many companies. The key, however, is to create a long-term plan for transformation while targeting the low-hanging fruit that can be used as a basis for generating quick wins. These quick wins can then be used to demonstrate early success in the transformation; thereby, creating appetite to adopt some of the more complex and strategic items. Transformation is made up of individual adjustments to behavior coupled with advances in technology and can be small and targeted, large and strategic, or both.