If risks were considered a key part for internal auditors, in 2020 risks are a must. Audits should be risk-based and agile, responding to emerging risks. For this year, top risks include:
- Cybersecurity and data privacy: we are moving to a digital era and by doing it, this risk increases. The reason: information and data have more value than gold. The challenge: to minimize it since the criminals are evolving and increasing sophistication to attack their targets. Cybersecurity in any company should include protection against attacks and data leakage. Key controls: intrusion tests done by experts, update the software on a regular basis, block bogus emails and train people to recognize phishing attacks.
- Third parties: the risk starts when that third party works with other sub-contractors. Usually, the company has no contract or contact with the sub-contractor and mainly relies on what the third party has done as due diligence. The reality: anything that happens with sub-contractors can affect the company; such as hiring minors, exploiting people, deplorable workplace conditions. Key controls: review any outsourcing arrangements with a risk-based approach, include in the contract the right to audit third parties and sub-contractors, and at least once a year, carry out surprise audits. Key point: That the company understands the extent to which it is exposed to third parties.
- Brand value and reputation: corruption, fraud, cyber-attacks can have a lasting impact on a company’s reputation and the value of its brand. Reputational risk is like an earthquake: we can know where the epicenter was, but we can’t know for sure how far its consequences are. Even a poorly managed comment on social media can harm the brand. Key controls: complying with regulations, effective audits, training and addressing issues properly so they won’t be repeated again.
What to know more about risks in 2020 and how you can be seen as a trusted internal advisor? Join us at the European Internal Audit Summit 2020 which will be streamed ONLINE on the 13th and 14th of May, 2020.
By Mónica Ramírez Chimal, Partner of Asserto RSC, Mexico City