From Risk Awareness to Value Creation: Internal Audit Strategies for 2025-2026

Risk Insight: Economic conditions—including inflation, tariffs, and geopolitical tensions—are ranked as the number one near-term risk by business leaders.
Audit Impact: Internal audit needs to elevate assurance around liquidity, stress testing, scenario planning, and financial resilience within enterprise risk management (ERM).
Value Impact: Strengthening these areas enhances investor confidence, financial stability, and organizational agility under uncertainty.

Risk Insight: Cyber threats remain among the top risks in near- and long-term risk rankings.
Audit Impact: Auditors must prioritize IT and cybersecurity audits, including incident response readiness and cyber resilience controls.
Value Impact: Proactive cybersecurity protection maintains trust and continuity, safeguarding brand reputation and operational integrity.

Risk Insight: Attracting and retaining skilled talent, especially in emerging tech, is a primary near-term concern.
Audit Impact: Audit teams must assess human capital risk controls—succession planning, skills mapping, development pipelines.
Value Impact: Effective talent risk management protects strategic execution and reduces disruption from workforce gaps.

Risk Insight: Heightened regulatory scrutiny is among the foremost strategic and long-term risks.
Audit Impact: Auditors should reinforce compliance reviews in areas like data privacy, ESG, and new regulations.
Value Impact: Avoiding regulatory penalties and legal exposure preserves financial and reputational capital.

Risk Insight: Dependency on vendors and partners is a substantial operational risk.
Audit Impact: Internal audit must expand vendor risk assessments and controls over outsourced functions.
Value Impact: Resilient third-party oversight minimizes supply disruption, service failures, and data breaches.

Risk Insight: Rapid adoption of AI and other emerging technologies poses strategic and operational risks.
Audit Impact: Audit functions must evaluate AI governance frameworks, model risks, biases, and data ethics.
Value Impact: Guided technology adoption drives innovation safely while protecting against unintended consequences.

Risk Insight: While less explicitly ranked, operational resilience remains an undercurrent across risk dimensions.
Audit Impact: Auditors should ensure business continuity and disaster recovery plans are complete and tested.
Value Impact: Strong operational resilience shields value creation during disruptions.

Risk Insight: The IIA’s Pulse report highlights that many CAEs now oversee fraud, ethics, and whistleblower programs.
Audit Impact: Internal audit must integrate proactive fraud detection and ethics control reviews within audit plans.
Value Impact: Ethical vigilance protects the organization’s moral license to operate and reduces financial and reputational damage.

Insight: Internal audit increasingly operates in a hybrid model—mixing assurance with advisory—and aligning more closely with strategy.
Impact on Risk Management: This alignment enables audit to preemptively identify and mitigate top strategic risks through advisory services, enhancing agility.
Value Impact: A proactive audit function elevates enterprise value by fostering strategic decision-making and risk-informed leadership.

Insight: Despite growing expectations, internal audit’s technical readiness lags: only about 28% report advanced data analytics capability, and 41% use GenAI.
Audit Impact: Internal audit must invest in upskilling, tools, and tech strategies (data analytics, AI fluency) to remain effective.
Value Impact: Tech-enabled audit functions deliver sharper insight, faster risk detection, and greater value-added efficiency.

• Conduct liquidity and cash-flow stress testing audits. This involves simulating adverse market conditions to see how the organization’s cash position holds up. It improves resilience by ensuring sufficient liquidity is available during downturns.
• Review hedging and treasury risk management processes. This assessment tests whether financial exposures (e.g., currency, interest rates, commodities) are being effectively managed. Stronger treasury practices stabilize earnings and protect enterprise value.
• Assess scenario planning and business continuity alignment with financial strategies. Evaluating whether planning models consider multiple economic outcomes helps leadership pivot quickly. This enhances agility and long-term stability.

• Perform penetration testing and vulnerability assessments. These reviews identify weaknesses that attackers could exploit. Closing those gaps reduces risk of costly breaches and safeguards sensitive data.
• Audit incident response planning and cyber resilience exercises. Testing how quickly the organization can detect, contain, and recover from a cyber event ensures operational continuity. This builds trust with stakeholders.
• Review compliance with data privacy regulations (e.g., GDPR, CCPA). Confirming adherence to privacy laws prevents fines and reputational damage. It also enhances customer confidence in how data is handled.

• Audit succession planning processes for critical roles. Ensuring leadership continuity reduces disruption risk. It also reassures investors and employees that the organization is built for long-term sustainability.
• Review workforce planning and training/development programs. Evaluating how employees are recruited, developed, and retained highlights talent gaps. Closing them improves productivity and innovation.
• Assess alignment of skills inventory with strategic objectives. Matching employee skills to future needs ensures the workforce can deliver on strategic goals. This future-proofs the organization’s competitive edge.

• Conduct compliance audits focused on emerging regulatory domains (privacy, ESG, AI). Staying ahead of new regulations reduces penalties and avoids reputational risk. This strengthens market credibility.
• Perform periodic policy and procedure effectiveness reviews. Regular reviews ensure policies are not just documented but operationalized. This creates a culture of compliance and accountability.
• Assess the maturity of enterprise compliance programs. Benchmarking compliance programs against best practices highlights gaps. A more mature program lowers regulatory risk and enhances investor confidence.

• Audit vendor due diligence and onboarding controls. Reviewing how vendors are vetted ensures that external partners meet compliance and quality standards. This reduces exposure to fraud or disruption.
• Review contract management and monitoring practices. Strong oversight of vendor agreements prevents financial leakage and ensures service-level accountability.
• Assess concentration risks and supply chain contingency plans. Understanding reliance on key suppliers allows for proactive diversification. This reduces the impact of disruptions and increases resilience.

• Evaluate AI model governance and data management frameworks. Reviewing controls over AI use ensures models are ethical, accurate, and explainable. This strengthens decision-making and compliance.
• Audit change management processes for new tech rollouts. Assessing how the organization implements new tools reduces adoption risks and maximizes ROI.
• Review intellectual property and licensing controls tied to emerging tech. Strong IP protections preserve innovation value and reduce legal exposure.

• Test disaster recovery and continuity plans under multiple scenarios. Running simulations validates the organization’s ability to operate through crises. This minimizes downtime and financial losses.
• Audit crisis communication protocols and escalation pathways. Ensuring clear communication in emergencies protects employee safety and stakeholder trust.
• Review resilience of mission-critical IT infrastructure and facilities. Testing infrastructure capacity strengthens reliability and reduces disruption risk.

• Conduct fraud risk assessments across procurement, payroll, and expenses. Identifying vulnerabilities in financial processes reduces loss and enhances governance.
• Audit whistleblower hotline effectiveness and case management. Ensuring employees can report concerns confidentially builds a culture of transparency and accountability.
• Review conflicts-of-interest disclosures and monitoring. Proper oversight prevents unethical behavior and safeguards organizational integrity.

• Assess communication protocols for crisis management. Clear messaging protects brand image during high-stakes events.
• Audit brand/reputation monitoring tools and escalation practices. Proactive monitoring helps detect and mitigate reputational risks early.
• Review ESG reporting accuracy and stakeholder disclosure processes. Reliable disclosures build investor and public confidence while supporting sustainable growth.

• Audit internal audit’s own use of analytics and automation tools. Leveraging advanced tools enhances audit efficiency and provides deeper insights.
• Review IT governance and digital transformation strategies. Strong governance ensures tech investments are aligned with strategy and deliver measurable value.
• Assess employee digital literacy and readiness programs. Upskilling employees in digital tools increases adoption success and maximizes transformation benefits.