Back in school, who was your favorite professor?
Here, people adored the professors who gave pre-tests, because they create a better chance of doing well on the real thing the following week.
Pre-tests provide clarity. They identify the most important things to know about the subject. And they help you become aware of the so-called “unknown unknowns”—those facts and figures you don’t even realize you don’t know.
Pre-tests are the key to avoiding that nightmare scenario (which you may still dream about) in which you discover there’s a whole chapter you forgot to study or prepare for. Those unknown unknowns are always the scariest aspect of any test. When you know you've got to study harder and more, you’ll do it. But getting caught off guard is a recipe for disaster.
Internal Audits: The Pre-test to Help You Prepare
When it comes to managing GRC, internal audits are a lot like the pre-test before your company’s external audit. If done right, they help companies get to know themselves and their processes before the proverbial “big day.” They highlight gaps before they become problematic. And they can even make external audits easier.
Some frameworks, such as ISO 27001, require an internal audit before the independent external audit as a condition of certification. But if that doesn’t apply to you, here are some other reasons you might want to get started with your own internal audit processes... and one important reason you might not.
5 Reasons You Need an Internal GRC Audit
1. Instilling an Atmosphere of Continuous Compliance
We get it. You have a mature GRC program, and you care less about audits. But it’s not always about you! Internal audits can be a great way to get other people on board with continuous compliance. Think of it as helping the rest of your study group prepare for the exam, even if you know the material by heart. This is a situation where you want the whole class to pass with flying colors.
By conducting internal audits, your company is confirming a commitment to continuous compliance and risk management—and raising confidence that your company will be ready for an external audit. By assuring colleagues across teams that your company’s processes are in line with its controls, you are readying your company to take on additional frameworks, such as SOC 2, that keep your company’s growth scaling. In that sense, internal audits are a prerequisite for hyper-growth.
2. Increasing Opportunities to Find Control Gaps and Failures
You want to discover deficiencies in internal controls as soon as possible, and definitely before your external auditor does, or worse, damage is done. An internal audit can identify gaps in internal controls—or whether internal controls are being met but need updating or reinforcement. For example, if your company’s internal controls for preventing or detecting a security breach have a hidden gap, recognizing that weakness in the context of an internal audit provides an opportunity to proactively fix the loophole before it becomes an issue in an external audit.
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3. Creating a Culture of Accountability for Risk and Compliance
Here’s a trick question: What do you do when you are alone on an elevator? Answer: Nothing you wouldn’t do in a crowd, because with today’s surveillance tech, you’re never really alone on an elevator. When you know you’re being watched, you’re on your best behavior, and you’re also more willing to notice and report violations.
Encouraging people to look out for irregularities and report them is behind the popularity of anti-phishing training (aka “phishing drills”), which have been shown to reduce employees’ susceptibility to phishing attack strategies. Similarly, by conducting internal audits, you encourage internal control owners to identify and report risk and compliance irregularities and understand their own GRC responsibilities. So, regular internal audits can help create a culture of accountability within your company.
4. Gaining a Clear View of Your Risk Posture
An internal audit is a key part of your company’s risk management process. Specifically, internal audits require an understanding of how your company’s processes work, including the systems and stakeholders that contribute to those processes. An intensive review helps identify changes in risk levels that may have occurred since the controls were first implemented. This improves your visibility into the organization’s real-time risk posture and subsequently, your ability to report accurately to management on the issue.
5. Onboard New Tools Ahead of Time to Prevent Issues
Adopting new technologies is key to transforming manual, time-consuming compliance activities into vehicles for growth. GRC teams in companies of all sizes are now seeing that by leveraging automation, they can improve their processes and increase the value they provide to the organization. But no matter how potentially beneficial, implementing new tech can come with risk. Internal audits create a great opportunity to onboard new tools and solutions in a safe and less risky way. Teams can get to know the platforms, understand how they work, learn how they can be optimized, and find out what they need to account for before the main event.
1 Reason You May NOT Need (or Want) an Internal GRC Audit
Notwithstanding all the benefits, internal audits don’t make sense for every company at every stage. An internal audit that is set up incorrectly can create lots more (unnecessary) work. It can also create major headaches for your team, considering all the extra activities that will be required.
There’s a smarter way to achieve all the benefits of an internal audit with none of the headaches: automate compliance and risk management activities to achieve continuous monitoring.
Continuously monitoring your risks and controls means you can catch control gaps and failures immediately, instead of at the next audit. The right continuous monitoring solution also leverages work you do for one audit to the others, reducing the time and resources spent on preparation.
Work Smarter, Not Harder
Everyone in class wants to ace the test, right? But part of doing well is knowing what to study, and how to optimally study for it—and that requires being aware of what you don’t know...preferably, before the teacher says, “Pencils down”. An internal audit is your company’s chance at a pre-test, a dry-run that shines a light on what you could be doing better.
There was another kind of professor who made tests even easier: the one who let you use your notes and books to answer test questions. Continuous monitoring turns every test into an open-book exam.
With continuous monitoring in place, when your company is facing that big exam—otherwise known as an external audit—you’ll have all the right answers.
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