New Research Reveals Growing Synergy Between Internal Audit and Risk Management

The Evolving Landscape of Internal Audit and Risk Management

A recent report, a collaborative effort by the Internal Audit Foundation, Baker Tilly, and Wolters Kluwer TeamMate, sheds light on the deepening integration between internal audit and risk management. This research, drawing on insights from the IIA’s Risk Research survey, underscores the critical need for strategic collaboration in an increasingly complex risk environment. The findings suggest that while internal audit's independence remains paramount, effective coordination with risk management is essential for robust enterprise-wide governance. This aligns with the IIA's Three Lines Model, which advocates for integration without isolation, guiding organizations to strengthen collaboration while preserving the objectivity inherent to internal audit.

Expanding Responsibilities and Tangible Benefits of Collaboration

The survey data indicates a clear trend of expanding internal audit activities into second-line functions. Approximately 32% of internal audit leaders are involved in areas such as enterprise risk management (57%), internal control (43%), and compliance (39%). This growth is consistent with other IIA research, showing a steady increase in Chief Audit Executives (CAEs) responsible for ERM. Looking ahead, 60% of respondents anticipate further integration between risk management and internal audit within the next five years. This strategic collaboration yields measurable benefits, with nearly 90% of respondents reporting positive outcomes. Key advantages include improved risk coverage (28%), reduced duplication of effort (26%), stronger organizational alignment (20%), enhanced board communication (11%), and more efficient reporting (6%).

Addressing Barriers and Safeguarding Independence

Despite the clear benefits, barriers to collaboration primarily stem from structural issues rather than a lack of intent. The most frequently cited challenges include limited resources or competing priorities (40%), differences in objectives or perspectives (34%), the absence of unified platforms (32%), and siloed processes (31%). Crucially, the research indicates that concerns about threats to internal audit independence due to shared responsibilities are largely theoretical, with 80% of respondents reporting no such risks. However, as functional boundaries continue to evolve, it is vital that collaboration is deliberately designed and structured, with robust safeguards in place to protect internal audit's objectivity and credibility. This ensures that collaboration and independence are not conflicting priorities but rather complementary elements of an effective operating model, strengthening risk oversight and delivering deeper insights to management and the board.