As we move through 2024, the world faces what has been described as a ‘permacrisis,’ characterised by persistent geopolitical instability and ongoing global disruptions. Major economies are experiencing elections, while conflicts in Ukraine and the Middle East continue to affect the global economic landscape. Organisations, still grappling with the aftermath of three years of pandemic upheaval, now confront additional uncertainties surrounding inflation, interest rates, energy supply costs, and talent shortages.
In this ever-evolving environment, the role of internal auditors has never been more critical. As internal auditors strive to help their organisations navigate these complexities, they must focus on realising their potential and ensuring robust risk management and governance.
The Emerging Challenges for 2024
Geopolitical Disruptions
With significant elections taking place across the world’s major economies in 2024, political shifts and policy changes are expected to bring both opportunities and risks. These geopolitical developments can create ripple effects in global markets, impacting trade, investment, and organisational strategies. Internal auditors must stay vigilant, anticipating how these changes might affect their organisations and adjusting their audit strategies accordingly.
Ongoing Conflicts
The protracted conflicts in Ukraine and the Middle East continue to disrupt global supply chains and energy markets. These conflicts contribute to economic volatility, which can impact inflation rates, interest rates, and overall financial stability. Internal auditors will need to consider how these factors might influence their organisation’s risk profile and adapt their risk assessments and controls to manage these evolving threats.
Economic Uncertainties
As organisations attempt to recover from pandemic-related disruptions, they now face new challenges related to inflation, interest rates, and fluctuating energy costs. These economic pressures can strain resources and impact financial performance. Internal auditors must provide insights into how these economic variables affect their organisation’s financial health and operational resilience, ensuring that controls are in place to mitigate these risks.
The Role of Internal Audit in the Current Climate
The Impact of the FRC’s Update to the UK Corporate Governance Code
The recent updates to the UK Corporate Governance Code by the Financial Reporting Council (FRC) have once again highlighted the pivotal role of internal audit. The code underscores internal audit’s role as the ‘eyes and ears’ of the organisation, tasked with providing valuable insights into the organisation’s culture, effectiveness of risk management, and internal controls.
Internal audit operates from a unique vantage point, enabling it to offer a holistic view of the organisation’s operations. This position allows internal auditors to support management and the board in identifying critical controls and monitoring their effectiveness, ensuring that the organisation remains resilient amidst ongoing uncertainties.
Realising Potential Through Internal Audit
In a landscape marked by continuous change and emerging risks, internal audit can play a key role in helping organisations realise their potential. By focusing on the following areas, internal auditors can significantly contribute to organisational success:
As we navigate the complexities of 2024, internal audit will be crucial in guiding organisations through a period of ongoing uncertainty and disruption. By leveraging their unique position and focusing on key areas of oversight, internal auditors can help organisations adapt, thrive, and realise their potential despite the challenges ahead.
Is your organisation prepared to tackle the challenges of 2024 with a robust internal audit strategy? Contact us today to learn how our expertise can support your internal audit function in providing critical insights and ensuring effective risk management.
