3 Key Risk Factors to Consider During Internal Audit
An Effective and complete risk management plan is totally based on sound internal audit. Effective determination of risk factors always based on success of value-added and strategic business actions taken through effective risk management strategies. Professional Audit advisors focus on establishing a risk based plan to determine the preferences and priorities of internal audit activities, continuous with the business goals.
In order to consider and allow risk assessment activities within the organisation, it is necessary for the top management and employees to profoundly recognize the underlying risk driver along with the potential consequences of the company. We are here to help you to understand the relationship between risk management factors and internal audit in order to assess and implement good practises for value adding outcomes done by the internal auditing team.
Key Risk Factors & the Role of Internal Audit Within the Organization:
Cloud Computing Refers to any online services of organizing and sharing data, information and any documents via storing them online and handling them remotely. This may involve: SaaS, PaaS, IaaS etc. the flexibility and effectiveness of information delivery is always based on complete risk assessment which could be done by proper internal audit. Without proper assessment, lack of training to users, full benefits of cloud computing cannot be materialized to lead operational, financial and regulatory compliance related risks. For example:
- Data security: Data security is important to reduce regulatory risk, data stored in the public cloud should be entrusted to the regulatory governance and risk compliance body.
- Operational risk: Integration of existing data storage and services using cloud could be expensive and time consuming in managing the work.
- Financial Risk: Taking private cloud services could require particular investment from the companies which creates a huge burden on them.
How Internal Audit Helps:
- Internal Audit experts can conduct an independent risk assessment related to operational, financial and data security risk.
- They assist the organization to to recognize and identify the appropriate cloud computing certifications and services authorisation according to cloud computing governance framework (e.g. ISO 27001- certification)
- Proper Assessment and clarity of roles and responsibilities assigned to the management, cloud users and administrators to manage cyber crisis.
- Conducting review of SLA agreements – Service Level Agreements to the third party cloud service providers and assess contractual regulatory risks.
In today’s world, cyber security is another major risk for the companies who are working or planning to work or handle their operations in a virtual environment. Cyber security appears at the top of business board agendas. Due to high cyber security breaches and online threats, it is become a major concern to increase the focus on implementing cyber protocols effectively, including:
Avoiding data security breaches, wrong consequences such as data breaches, legal fines, customer losses liability and obligations, ensuring intellectual property details and implementing the protocols to reduce the targeted cases of online cyber attacks, hacking threats, malware activities etc. According to the survey held by the KPMG and 60 IT companies of Switzerland, following things found that reflects the necessity of cyber security internal audit:
- 42% of IT companies are facing cyber attacks problems during the completion of any data storing activities that cause financial losses problems as a result of 59%.
- 82% of cyber response strategies cannot cover all incidental attacks done against suppliers and business partners.
- According to 44% IT companies in Switzerland, there are no instrumental facilities and effective protocols in the response of cyber attacks during third party contracts.
How Internal Audit Helps:
- Internal Audit helps to perform risk assessment by checking security perspective, data security, networking protocols and security management.
- Auditing experts provide clear and sound understanding of IT discrepancies and key threats related to cyber attacks possessed & influenced companies’ IT departments and their strategies.
- Prepare cyber attacks reduction models such as “Multilayered Data Defence Schemes to detect security threats and data encryption breaches methods.
Business Continuity and Crisis Response
Nobody can predict disaster and uncertain happenings, so predetermined arrangements become necessary when it is related to business consistency and responding to financial or economic crisis. With the rapidly changing business environment, the old and traditional responses of risk assessment and outdated regulatory compliance decision create burden on companies to make accurate and relevant decision to response crisis, including:
- Cyber Crisis, including data safety attacks, IT system wear-tear outage, security breaches, lack of protocols connectivities etc.
- Physical Crisis involving, business position outbreaks, disease outbreaks, natural disasters in order to operate multinational business processes in a global market.
How Internal Audit Can Help:
- Internal Audit Advisor conducts proper and effective review of whole businesses and crises related to management systems, involving governance, risks, & evaluating quality assessment.
- Experts are able to assess the leadership effectiveness to understand, evaluate and recognize the crisis situations with the help of surveys conducted to determine the level of crisis and impacts.
- Preparing the crisis management plan to evaluate the business condition and failure of organisational strategies.
- Checking and rectifying the recent event done in the business, all transactions which are underlying with management risks in order to notify the business situations.
- Conducting facilitating brainstorming sessions and workshops to gain the knowledge of emerging risks and their impacts.
What is actually needed by Internal Audit?
Internal Audit is necessary to check the expertise of effective risk management factors and their impacts on business consistency while implementing good practices. It gives sound knowledge of the emerging potential threats that may lead to specific economic and financial crises within the organization. Experienced Auditing professionals assist small to large scale businesses to conduct auditory workshops to understand the whole scenario in order to drill business challenges.