Things happen, but internal auditors can make the world a better place
By Anne Kiem, CEO of the Chartered IIA
In the last week of February, I attended a dinner for audit leaders. The guest speaker, Derek Leatherdale, discussed geopolitical risk and how internal auditors can prepare for the unexpected and unpredictable. I came away thinking that this would be a good topic for my March blog.
A few days later, the US and Israel began their air strikes on Iran, killing the Ayatollah Khamenei who had led Iran for over three decades. Never has a talk been so timely.
While the US had indicated that it might engage in military action, I don’t think many people expected this action to be so extensive. Things escalated fast with retaliatory strikes and, at the time of writing, it is unclear how events will develop.
This underscores exactly why internal auditors must ensure their organisations are prepared for anything and can react swiftly as volatile situations change.
At the dinner, we discussed what such preparation means in practice. None of us can prepare for a specific unknown event – and whatever we think might happen probably won’t happen in exactly the way we imagine. But we can develop the muscle memory we need to respond fast, evaluate options and make good decisions immediately after a crisis occurs.
This applies to many rapidly evolving risks, not just geopolitical events, but also to supply chains, tariffs, sanctions and cybercrime.
Things never happen as we expect them to and it’s impossible to prepare for all eventualities, but this is not a reason to fail to prepare at all. Individual risks may be too big, too unpredictable or too daunting. Preparing to be agile and move swiftly when, and as, events happen means we can move incrementally while remaining aware of many possible ramifications.
We are interconnected
One key lesson is that we are all interconnected. Your organisation will be affected by the current conflict. No major geopolitical event, or climate catastrophe, or massive cyber outage, impacts only the key protagonists.
The current military action is a case in point. It’s not just about the US, Israel and Iran. There are holidaymakers and business travellers in an increasing number of places in the region unable to fly home, and international shipping is at risk using the Straits of Hormuz.
Rising energy prices will impact businesses and their employees globally and may send up inflation, affecting economies worldwide. Societal views may become more polarised, causing unrest or extreme politics.
Many of these concerns are beyond our control, we can only prepare to deal with potential consequences. Some can be addressed at corporate level. But all of us can do something.
Our response to terrible world events should not be torpor or depression, but a resolution to push back where we can and help our organisations, our colleagues and our neighbours to be resilient and overcome evolving challenges.
You don’t necessarily go to the gym to prepare to run a marathon. You work out to ensure you are strong enough to deal with the problems life throws at you
Build communities
An important part of this resilience should be to pull together and support each other. At a professional level, internal auditors can reach out to the wider internal audit community via the Chartered IIA and our communities and forums.
Discuss challenges and share inspiration and solutions to common problems with your peers. Problems shared really can be problems halved or even quartered. However world events affect you, you are not alone and others will be asking the same questions. And of course, where there is turmoil there are also opportunities.
It’s essential to keep connected in difficult times – and to share your solutions. Internal auditors spend much of their time hearing about, and identifying, problems. As a community, we can focus on our successes and practical actions, which also underpin how the profession is viewed by management.
We can also learn together at events such as the Internal Audit Conference and our regional conferences, and we can share lessons of excellent performance at the Audit & Risk Awards event. Individuals and teams can learn how to increase resilience and deal with a variety of emerging risks on Chartered IIA courses.
The fundamental purpose of internal audit is to make the world a better place. Your work increases trust and transparency and improves the management decisions that affect us all. That’s why internal audit work on culture and ethics is so important.
But why stop at work? At a personal level, most of us will know or work with somebody who is personally affected by the current global crises in the Middle East or indeed other places where there is conflict. Simply asking a colleague or neighbour with family in an affected region, or working on an overseas military base, whether their relatives are ok and how they feel, makes a difference.
It’s also worth remembering that global events may create new stresses and worries for individuals that we cannot see from the outside. This may be an organisational issue if it affects employees or customers, but it may also require personal empathy.
If internal audit makes the world a better place and strives to make organisations more resilient, I’d like to suggest that we also think about what we can do individually to help people become more resilient – no matter what challenges arise next.