Influence builder – Steven Welsh on winning the A&R Inspirational Leader award
Steven Welsh’s first challenge came early in his new role at Funding Circle – requiring a turnaround that was rapid even for the innovative and adaptable fintech sector. He had been brought in with a remit to build an in-house internal audit team, with the aim of replacing the outsourced team over the course of a year. In reality, he was three weeks into the job and had just signed a lease on a flat in London, when the first Covid lockdown began. He remained in Scotland and built his team remotely. The outsourced provider was replaced entirely within three months.
For his new team, Welsh looked for experience and specific areas of expertise – such as cyber and data analytics. With just five people, including himself, he needed to ensure that these people could bring senior-level equivalent skills and perspectives to their roles, with a strong combination of both collaborative attitude and technical aptitude. He wanted people who already had an idea of what good internal audit looked like and understood how people think, and who wanted to see their work make a real difference.
“I had a powerful story to tell to attract talent into the team; the ideal combination of building a new progressive internal audit team in an innovative purpose-driven organisation,” he says. “I could offer candidates the opportunity to make their mark and build a team focused on doing the right stuff to have the greatest impact. In return, I wanted people committed to living the adventure.”
The previous outsourced internal audit team had not been seen as influential or relevant, and the audit committee and leadership team wanted a stronger internal audit team that could deliver more impactful work. Welsh’s key focus was to shift perceptions and sell the vision of internal audit and the value it could add to Funding Circle, while also building the new team.
Repositioning
Given that the audit committee had high expectations of internal audit, but felt that these had not been met in the past, Welsh began by identifying three key areas that he felt were essential to reposition internal audit. First was engagement – he wanted to create stronger, meaningful, constructive and challenging relationships with senior management. “This was about developing mutual understanding, rather than solely focusing on delivering an internal audit plan,” he says. “It was about shifting perceptions and developing trust. The management team needed to know that, while independent, we were not isolated and had the same overall objectives as they did – to make Funding Circle as successful as possible.”
Second, he had to improve the relevance of internal audit. He needed to move away from a function that set an audit plan and pursued it doggedly, regardless of circumstances, to a function that management could see was agile and focused on the areas that mattered most, when they mattered most. One important part of this was to ensure that the internal audit team was in the information flow, in terms of board-level reports and attendance at board risk committee, audit committee and senior level risk and governance committee meetings.
“Being in the information flow and knowing all the same details as the senior management was essential. The relevance of internal audit is informed by the relationships you create and whether you know what matters most to the organisation at any time,” he says. “You have to understand the strategic goals and how your plans interlock with these. You should always be able to answer a question about why what you are doing is important to the organisation.”
Third, Welsh focused on the impact of internal audit work. While this stemmed from the team’s relationships and relevance, impact included a further dimension – how its work was replayed back to the organisation and what it prompted them to do. “An important attribute of internal audit leadership is the ability to offer a different perspective by joining the dots to provide impactful insights on common themes and root causes to prompt action,” he says.
Welsh adds that the audit committee chair referred to this as “the three whats”: the initial “what?” (what is the issue?); the “so what?” (why does it matter?); and the “now what?” (what will we do about it?). The first two are of limited use without the third.
Influence
“At its heart, internal audit is a people business – you need to tell a compelling story to instigate change,” Welsh says. “We can’t tell management what to do, so our power lies in influencing people and persuading them to see things differently and giving reasons to change the way they do things.”
“We can’t just say ‘these are the facts’, we have to say ‘these are the implications of the facts’,” he explains.
He overhauled the internal audit reports to senior management and the audit committee to include thematic insights with the aim of improving management alignment across the organisation and began providing new types of reports, for example, on change programme assurance and insights.
He improved the coordination of assurance information and planning across the three lines and introduced periodic enterprise risk management framework maturity assessments. He also introduced new types of audit – for example, “T-shaped” audits (end-to-end high-level process reviews with deeper-dives into selected areas), as well as new advisory engagements.
The team uses data analytics extensively and constantly looks for ways to identify the root causes of issues and to link their findings to strategy and work being done elsewhere across the organisation to ensure their work has maximum impact.
Development
Small teams can struggle to keep abreast of changes beyond the borders of their own organisation. Welsh assigned a senior member of the team to look for further ways to optimise internal audit processes, including developing an internal audit competency framework, enhancing quality assurance performance indicators and establishing a guest auditor programme.
“Everyone in the team has a remit to understand what’s happening outside the organisation in their patch as well as inside, for example, developments in data analytics,” he says. “We participate in numerous networking events to share stories with other teams and we use these relationships to ensure we punch above our weight for our team size.” Two members of his team are currently helping to develop policy papers with the Chartered IIA, he adds.
“It’s essential always to know what good looks like – you need to reset your ambitions constantly,” he explains. “We must ask what new things could do for us as an internal audit team, not just in our audits, but in the way we communicate and what it means for the risks and opportunities for our organisation. If you don’t keep abreast of developments, you fall behind quickly.”
Welsh also increases the team’s exposure to senior management and the board, for example by their attendance at risk or audit committees. “This gives them recognition as well as experience and exposure – which is only fair since they do most of the heavy lifting,” he explains.
Recognition
When he found out that he had won the award for Inspirational Leader, Welsh admits he was lost for words. “I was dumbfounded when I was told that my team wanted to nominate me,” he admits. “Winning it was amazing. I particularly appreciated the recognition from my peers across different organisations. The endorsements from the board, CEO, CFO and the team showed me that we were really making a difference in perception and performance.”
He adds that much of the credit for the award must go to the organisation for creating an environment where this internal audit approach is welcomed, and to his team who have worked tirelessly to bring the vision for internal audit to life and demonstrate how it adds value.
“I would strongly recommend to others that they enter the Audit & Risk Awards,” he adds. “It’s a great opportunity to reflect on everything you’ve been doing and the difference it makes. I was really struck by the calibre of the organisations and individuals shortlisted across all the categories.”
In the end, he says, a good leader is always standing on the shoulders of giants. “Throughout my career, I’ve had the opportunity to learn from some great leaders.” It seems that his team would say the same about him.
Nominations for the next Audit & Risk Awards open in October.
This article was published in September 2023.