Resilience in the Face of Emerging Risks and Regulations
Author: Dom Schaefer (info@workiva.com)
There’s no question that audit teams have been under immense pressure lately. From increasing audit committee and management expectations to “do more with less” to talent shortages that arose with the COVID-19 pandemic and have no end in sight, internal audit is certainly feeling the heat to keep up with it all.
Not to be the bearer of bad news, but the demands and challenges noted above likely won’t subside on their own and are only going to increase as new reporting requirements – including associated assurance requirements – are adopted for ESG.
Today’s internal audit teams truly find themselves between a rock and a hard place. The good news is that auditors can take these challenges and turn them into opportunities to maximise value. So how can you tackle today’s complex risk landscape and build resilient teams? Let’s break down what that could look like in practice.
Evaluating skill sets to build a diverse, effective team
Auditors should take a critical look at their own processes – most can find opportunities to streamline and save time across at least a few activities. Another significant opportunity is to leverage technology to automate routine, manual tasks to free up valuable time to focus on higher-value work.
One of the most important areas audit leaders should consider as they develop plans for addressing existing and emerging risks like ESG is to evaluate the capabilities needed to effectively and accurately perform the work. If audit leaders find any gaps in skill sets, they should create a plan to fill those gaps.
Here are three basic models to do so:
1. Build it: Develop your existing team – most will need training on ESG risk areas that are material to your organisation so they have adequate context they need to apply their audit skills. This also means assessing whether team members need additional training in crucial areas such as critical thinking, root cause analysis, problem solving, facilitation skills and more.
2. Hire it: Get creative with your hiring process to find the right skill sets and bring in fresh perspectives. Hiring non-traditional candidates with expertise in various aspects of ESG such as environmental engineers, HR specialists and other ESG professionals can help you fill any gaps.
3. Rent it: Bring on third parties to supplement your existing team or outsource this effort completely to an organisation with the required skills and knowledge.
Of course, you can always take a blended approach by supplementing your current team with new hires or third parties who complement your team.
Most organisations have established processes for bringing on third parties to fill particular needs, but a much smaller fraction of internal audit teams have mature processes in place to identify the skills and capabilities required to create resilient teams. Here are steps you can take to assess current capabilities against changing requirements to help fill in any gaps:
● Identify current and future skills and capabilities: It is imperative that audit leaders invest time and effort to stay abreast of changes affecting the profession plus all of the factors that could impact your organisation and industry.
Look for themes across sources and consider the implications to your organisation, industry, and the overall economy. As you consider those themes, you can often determine what new skills or capabilities will be required to understand risks and opportunities.
● Assess team and individual capabilities: Once you have identified new skills and capabilities, compare your team’s current skill sets with what is needed to address emerging risk areas and determine any gaps.
Once gaps are identified, consider the interests and aptitudes of your team and pinpoint which individuals are motivated and want to expand their knowledge in a new topic or discipline.
● Create development opportunities: Encourage team members to research opportunities and build a development plan that empowers them to take ownership and improve personal accountability for new efforts.
Audit leaders can then consider how to balance training costs with budget limitations and determine if an alternative, such as a blend of formal training, personal research, mentoring and application of new learnings, will be effective for the organisation’s needs.
Helping your team members develop the skills needed to contribute and make an impact as your organisation takes on the various challenges of emerging risks, including ESG disclosures, is essential to building an audit organisation that is resilient and adds real value.
About Workiva
Workiva offers the world’s only unified platform for assured integrated reporting. The Workiva platform brings together financial reporting, environmental, social, and governance (ESG), and governance, risk, and compliance (GRC) teams in one secure, controlled, audit-ready environment to simplify complex reporting challenges and meet stakeholder demands for action, transparency, and disclosure of financial and non-financial data. Learn more at workiva.com.
