In today’s fast-moving world, yearly risk assessments can become outdated almost as soon as the final reports are generated. After all the hard work that went into reviewing what occurred over the past year and what might happen going forward, new events might occur that change the whole picture. That’s why many organizations are switching from annual reviews to more continuous risk assessments.
As we dive into this article, continuous risk management — often driven by internal audit — can provide several benefits to organizations. Not only can making this switch improve the ability to detect relevant risks, but it can also help in areas like staff morale and collaboration.
More specifically, you should consider making continuous risk assessments part of your internal audit plan in order to:
1) Adapt to new risks
As recent history has shown, new risks can show up at any time, often in unexpected ways. A global pandemic, supply chain bottlenecks, labor issues, inflation, international war, and several other challenges have occurred over a relatively short period. If you waited for an annual internal audit risk assessment to address these areas, the business might have been left to suffer for several months. And any finding from the annual assessment might quickly become outdated as emerging risks become more prevalent.
Instead, taking a more dynamic risk assessment approach with continuous monitoring of new hazards can help organizations respond in a timely manner. You can adapt internal controls more in real-time, rather than waiting to hear about threats once per year.
2) Increase accuracy
Another reason why continuous risk assessment should be part of your internal audit plan is that it can potentially increase the accuracy of control testing and overall risk advisory.For example, assessing cybersecurity risks on an annual basis might include reviewing certain software permissions that employees have. Yet perhaps an organization needed to recently adjust permissioning to match changes to its use of remote work. In that case, the annual risk assessment might be referencing outdated controls, compared with continuous auditing of permissioning based on current protocols.
3) Reduce pressure
While it might sound contradictory at first, continuous auditing can reduce pressure on internal audit teams and other stakeholders involved in continuous monitoring. Even though that might mean having risk be top of mind more frequently, looking at risk on an ongoing basis can be less stressful than trying to fit everything into one internal audit risk assessment per year.
This pressure can be analogous to staff performance reviews. If you only conduct them once per year, there can be a lot of buildup and nerves around that annual event. Yet more ongoing, real-time feedback might help staff recalibrate along the way, without worrying so much about that one annual review. Similarly, ongoing risk assessments might boost morale among internal auditors who don’t have to fear an annual assessment.
4) Improve collaboration
Another reason to consider dynamic risk assessment is to improve collaboration among departments. Internal audit teams often look at several distinct areas, such as financial, regulatory, and operational risk, each of which might require working with separate business units. Doing so can help internal audit teams get a full picture of organizational risk factors, while also potentially helping these other departments understand how different types of risks could affect them (e.g., the financial consequences that could stem from regulatory risk).
But why limit this collaboration to once per year for an annual internal audit risk assessment? Instead, audit teams can collaborate with other functions on an ongoing basis with continuous auditing.
5) Satisfy stakeholders
Lastly, continuous risk assessment can help satisfy stakeholders such as executives and boards who want to understand what’s relevant, rather than getting outdated reports.
While internal audit teams don’t necessarily have to meet with stakeholders more frequently, they can make information such as dynamic risk scoring more readily available. This way, executives and boards can get a more up-to-date view of risk on their own terms, rather than waiting for an annual assessment.
Ready to move to continuous risk assessments?
Given all the benefits of continuous risk assessments, it often makes sense for organizations to invest in technology like compliance management solutions and risk analysis software that can help internal audit teams easily stay current on risk, without needing to put in Herculean efforts to create digestible reports.
In particular, software like TeamMate+ helps with audit automation so that you can easily keep up with continuous monitoring. TeamMate+ can also help in areas like accessing real-time data from other departments and software tools via data exchange APIs, which can reduce pressure on staff to pull everything together while laying the groundwork for teams to collaborate on what this data means.