Increasing risk velocity and volatility converged in 2022 to create unprecedented risk bedlam. But this is no time to dwell on what happened this past year. Instead, it’s time to think about what you can do to start fresh in 2023. What have you learned? How can you use that knowledge to help your organization get ahead of risk and set the right priorities for next year?
I’m honored to be giving a keynote address at AuditBoard’s annual Audit & Beyond Conference taking place October 26-27, 2022. By focusing on “5 Risk Imperatives for 2023,” I hope to inspire audit, risk, and compliance professionals to start making concrete plans for prioritizing and acting upon the right risks and initiatives in the coming year. This article offers a preview; register for the virtual event to watch my full keynote presentation and earn up to 5 CPE credits during the conference.
1. Find Your Voice and Use It
Risk bedlam is no time for us to be timid. Rather, it’s time to recognize that we each have a valuable perspective to offer. We’ve spent years learning the ins and outs of our industries and organizations, and we can use our knowledge to help our organizations get ahead of risk in 2023. But we need to be willing to speak up.
It’s worth acknowledging that audit, risk, and compliance professionals sometimes feel pressure not to speak up. This is especially true when our perspectives contradict what executive management has said they want to do. For example, maybe there’s a compliance issue with a planned course of action, or an emerging risk nobody is acknowledging. Whatever it is, we must be willing to call it like it is, speaking truth to power. To pave the way, we can take actions to better define roles, strengthen relationships, and manage expectations.
2. Forge a Talent Management Strategy
Most organizations are struggling to hire high-quality talent. But the real problem is bigger. Organizations need to design comprehensive talent management strategies focused on achieving longer-term outcomes, not simply on filling immediate needs.
Talent is still our most critical resource. We must be strategic in sourcing, attracting, nurturing, and retaining the talent needed to help our organizations face tomorrow’s risks, adapting our approach to fit an evolving workforce. We can begin by identifying needs and desired outcomes and assessing gaps in skills and expertise. From there, we can customize outcome-driven strategies to address those needs and gaps. This can help ensure that the talent we hire today will be adequately prepared to sustain our organizations against the risks of tomorrow.
3. Collaborate to Identify Tomorrow’s Risks
Identifying emerging risks has long been a challenge for audit, risk and compliance professionals. In the past, however, emerging risks often took longer to fully materialize and impact our organizations. In risk bedlam, we’re lucky to have any lead time at all. Confidence is low in our ability to identify emerging risks. Results from AuditBoard’s upcoming Focus on the Future survey of North American internal audit leaders scheduled for release in November 2022 revealed that nearly one in three respondents believe the “inability to identify emerging risks in a timely manner” is either a “very high” or “high” risk to their departments’ ability to accomplish its objectives.
Today’s risks emerge faster than ever. Risk velocity has accelerated to the point where, if you’re not constantly watching the horizon, you’ll end up surprised. Keeping adequate watch requires many sets of eyes. Responding quickly and well takes unprecedented levels of collaboration across audit, risk, compliance, and executive management.
4. Partner to Continuously Monitor Risks
Cross-functional collaboration must continue once risks are on your radar, ensuring that risk assessments and audit plans stay fresh. Most organizations are already working toward this imperative: 86% of respondents in our new Focus on the Future survey reported that they routinely “collaborate with other functions that also monitor risk (e.g., ERM, compliance).”
In this age of risk bedlam, it’s crucial to continuously monitor risks. Enterprise resilience demands dynamic audit planning and execution. Partnering on continuous monitoring will position your organization to better navigate the decisions and surprises to come.
5. Impart Foresight to Create Value
Hindsight is easy. Insight is more challenging and more valuable. But foresight is the real key to unlocking value creation. I have written about this topic frequently, first raising it as an imperative in 2015. The need has only become more urgent.
Foresight isn’t guessing based on hunches. Foresight is the ability to contemplate and prepare for the key risks and challenges that your organization may face. It must be based on past wisdom, carefully managed institutional knowledge, and a strong understanding of the current environment relative to your organization, industry, and geography. Foresight will enable you to raise the flag so that management is able to prepare for key challenges and opportunities — before they materialize. It’s also a key avenue for audit, risk, and compliance professionals to provide differentiated value in an age of increasing automation. My keynote presentation will share strategies to support your ability to provide foresight, as well as ideas for what it could look like in practice.
Join me in laying the groundwork for protecting, creating, and realizing greater value in 2023.
Richard Chambers, CIA, CRMA, CFE, CGAP, is the CEO of Richard F. Chambers & Associates, a global advisory firm for internal audit professionals, and also serves as Senior Internal Audit Advisor at AuditBoard. Previously, he served for over a decade as the president and CEO of The Institute of Internal Auditors (IIA). Connect with Richard on LinkedIn.