‘Once-in-a-generation events’ demand a collaborative response from risk and internal audit professionals
With this Friday 24 February marking the one-year anniversary of the war in Ukraine, Airmic has worked with the Chartered Institute of Internal Auditors (Chartered IIA) to urge business leaders to prioritise action to prepare for further geopolitical disruption.
With geopolitical tensions rising around the globe both organisations are concerned that businesses may not be prepared for the next big crisis.
“Geopolitical risk is becoming far higher in profile on the risk radar of most businesses and is a board agenda item – and one which demands a collaborative response from risk and internal audit professionals,” said Airmic CEO Julia Graham.
”Building resilience is imperative. Businesses need to be prepared to deal with significant disruption caused by geopolitical incidents.”
To support their call to action the Chartered IIA and Airmic have joined forces to issue a new report ‘Navigating geopolitical risk’ published in partnership with AuditBoard.
The report is aimed at encouraging boards, internal audit, and risk management to work closer together in tackling the risks associated with geopolitical events.
Main themes of the report include:
- Organisations needs to be agile in responding to the challenges of ‘once-in-a-generation events’ occurring with regular frequency, and to be in a permanent state of readiness that recognises the nature of today’s crises;
- Scenario planning and horizon scanning are key to preparing for geopolitical risk. Organisations must resist the temptation to be events-led and retain agility for when crises may strike, and
- Stereotypical profiles of risk and internal audit professionals need to be reviewed to ensure they meet future needs. They must work together and at the same pace.
Most unpredictable period since Cold War
Anne Kiem OBE, chief executive, Chartered Institute of Internal Auditors said: “With geopolitical risk still growing in severity, business leaders must learn lessons from the conflict in Ukraine, by making sure they are properly prepared for the next big crisis that could be coming down the track.
”Internal auditors, working in partnership with risk management, have a vital role to play in supporting organisations preparedness for major geopolitical incidents.”
Hoe-Yeong Loke, head of Research, Airmic, added: “Geopolitics has never been so turbulent and unpredictable since the end of the Cold War. Nevertheless, geopolitics is not a game of predicting future events.
“To build resilience in a challenging world, scenario planning and horizon scanning are key for organisations preparing for geopolitical risk.”
Richard Chambers, Senior Internal Audit Advisor of AuditBoard, said: “The Chartered IIA and Airmic report on navigating geopolitical risk could not be timelier, given the one-year anniversary of the war in Ukraine.
”Boards should be looking to both their internal audit and risk management functions to get assurance that their scenario planning processes for geopolitical events are robust – in the new era of geopolitical uncertainty collaboration is key.”