Chief Audit Executives (CAEs) continuously assess how to deliver on their objectives to maintain trust of shareholders and stakeholders. This includes considering signals of change in risks faced by their organization and, in turn, changing the focus of the Internal Audit plan needed. Our complementary series, “On the CAE Agenda,” provides a full view of top risks highlighted this period.
Signals of change
Geopolitical risks have moved up the agenda as the world is going through a period of extreme political volatility. In a highly globalized business environment, these risks affect all companies regardless of where they operate because of the impact on the global economy, supply chains, cyber security, and business continuity, among others.
Only few could have predicted the recent turn of events. The World Economic Forum’s 2022 Global Risk Report1 published in January 2022 did not even include political disruption or armed conflict in its top ten risks. The assumption that there was no immediate threat or that exposure to geopolitical risk to an organization is far away simply as a function of where it is located, has proven false.
The importance of having a cohesive response strategy that integrates with resilience capabilities is now even more relevant. Internal audit can help incorporate macroeconomic and geopolitical risks at an engagement level, outside of an annual audit, and support the improvement to both management systems and control processes.
Footnotes
- War in Europe: Why Geopolitical Risks Should Always Be on Internal Audit’s Radar, Richard Chambers, Feb 27, 2022.
