Internal Audit in the Age of Disruption

Or you can do nothing and get flattened.

Disruption is sometimes described as a wave, crashing upon established business practices; or as an earthquake, upending the stable ground upon which the organization has stayed solid for years.

Neither metaphor is quite right. Disruption is more like a herd of horses galloping toward you. Sometimes you can see the herd coming, other times it catches you by surprise. With enough skill and preparation, the organization can climb astride the herd, harness its strength, and go in a new direction.

Or you can do nothing and get flattened.

The great challenge for internal audit executives today is to perceive disruptions in their true form. Recognizing what’s coming and providing insight to the organization on how to harness that disruptive power is truly valuable. This is nothing new for internal audit. Insight is core to the Mission of Internal Audit — to enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight.

“Disruption does sometimes come quickly, and catches us all by surprise,” says Carolyn Saint, chief audit executive (CAE), University of Virginia. “But we should also be honest, that many times you can see a disruption coming from miles away. A real, formidable challenge is how to explain the implications of a coming disruption to business leaders, so the organization can respond.”

Examples of slow-rolling disruption are many, and usually they involve “the rise” of something: of the internet in the 1990s, of China as an economic power in the 2000s, of cloud computing in the 2010s. Audit executives can take their pick of possible disruptions for the 2020s: self-driving cars, artificial intelligence (AI), the Internet of Things (IoT), protectionist trade policies — and, most likely, many more.

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