Auditing and advisory firm KPMG has released a report that documents the rise of new risks and disruptive trends that impact the critical internal audit functions. This knowledge is also of value to insurers, as it can be used in developing new products and assessing risks their clients may face.
The report, titled Audit Trends 2016: Targeting transformation, highlights four major disruptive trends in businesses that put the pressure on auditors, making oversight tasks more challenging.
- Technology risk: The fast rise of technology has also enabled more tech-savvy crooks. From cyberattacks on corporate networks to data protection by third-party suppliers, audit committees and insurers should understand these risks and learn to identify organizational exposures and extent of security.
- Political and economic risk: External risks such as oil and other commodity prices, geopolitical conflict, and the rise and fall of emerging markets, have significant direct or indirect impacts on an organization’s strategy and performance.
- Evolving corporate reporting: Shareholders and regulators expect more transparent and comprehensive reporting, including integrated and strategic reporting of non-financial information. Audit committees should be able to provide better performance metrics, as well as understand the data collection process.
- More complex domestic and global regulations: New regulations have been introduced by Canadian supervisory bodies, and audit committees should also keep updated with global regulatory trends, as these could shape domestic operations in the future.
KPMG notes that even though the scope of challenges is vast, auditing (and by extension, insurance) companies can apply a number of best practices to ensure consideration of the full range of existing and emerging issues. The appropriate level of technical knowledge and experience to manage disruptive forces.
