Risk in Focus 2022 | Hot topics for internal auditors
Hot topics 2022: time use of climate risk not yet in line with importance
Organizations and their internal audit functions are faced with a rapid pace of change and unprecedented uncertainty. The pandemic has profoundly changed operations and labour, disrupted the supply and demand and undermined previously sound business models to an extent few would have thought possible. Climate change is now threatening to have the same effects.
Every year, the European Institutes for Internal Auditors work together to identify the most important risks for the coming calendar year. The results are intended as a tool for drawing up the audit plans for 2022 and give the governing bodies a good idea of what challenges they can expect in the coming year.
The record number of 738 responses came to the annual survey. The institutes also conducted 50 qualitative interviews, among 35 CAEs, 12 chairmen of audit committees and three CEOs to gain a deeper understanding of how these risks manifest and evolve.
The results of the Risk in Focus study are summarized in the following 10 'hot topics'.
- IT security: response and recovery
- Rising sustainability regulations
- Accelerated digitalization and low-code adoption
- Workforce fatigue and cultural erosion
- Pandemic response: organizational and strategic resilience
- Financial risk and the looming insolvency wave
- Rising inflation and the global tax clampdown
- Climate change and sustainability is now a principal risk
- Supply chain strains and the race to flexibility
- Health and safety amid the continued COVID threat
Key findings Risk in Focus research
- The most important finding is the increasing importance of Climate change and environmental sustainability on the agenda. The number of CAEs that see this as a top 5 risk has increased by 41% compared to last year, and is now up to 31%. No other risk area has a greater rise; it is the continuation of a trend: in 2020, only 14% of respondents had Climate change in their top five risks. Now is the time to act, also for internal auditors! A number of risk areas with a 'human' component are increasing in importance, such as Human capital, diversity and talent management, Organizational culture, and Health, safety and security. Organizations are concerned about the consequences of the pandemic and the extended period of working from home on staffing, motivation and mental fatigue of employees.
- Cybersecurity remains the top risk area with four in five (82%) companies calling it one of the top risks they face, exacerbated by telecommuting and operational disruptions caused by the pandemic. Even more than prevention, there are major challenges in response and recovery
- Organizational culture has, in line with the above, seen a substantial increase in the interest of 35%. Instead of 20%, 27% of CAEs now consider this a top 5 risk for the organization. The culture threatens to be affected by the foregoing point, which can have major knock-on effects.
Click here for the report for a broader picture of the research and results.
Click here for the report for a broader picture of the research and results.