Internal audit - skills in a crisis

The 2020s have taken crisis management out of the textbook and into reality. War, supply chain issues, cost of living crisis, strike disruption, rising inflation and the continued ripples from a recent pandemic to name but a few. According to the World Economic Forum’s 2023 Global Risk Report we also need to prepare for polycrisis – the convergence of multiple catastrophes at once.

In a crisis, survival is key. Just as a drowning person thrashes around reaching out for any lifeline, so can an organisation with knee jerk reactions to events. But this is the opposite of what children are taught in water safety classes; flip, float and follow.

Read on for the 3F skills internal auditors need in a crisis to help their own organisation to safety. 

Being able to make good decisions in times of crisis is important.

Flip, float, follow is a mantra that gives space for decision-making.

It enables energy conservation by not fighting against the situation - flip onto your back, float calmly, follow the current. Doing this gives times to signal for help or float far enough alongside a dangerous current to be able to swim through once in calmer waters.

So how does this translate into 3F skills for an internal auditor in a crisis?

Flip = recognising when a situation is beyond normal capabilities and outside of risk appetite to put resilience measures into action. The organisation might be out of its depth or caught in a fast-flowing current.

• Acumen - being aware of the crisis, knowing the details and its severity.
• Risk – as one with the board’s perspective on risk appetite.
• Courage – initiate dialogue, don’t wait to be invited to the conversation.
• Controls - always ready with a SWOT opinion on the control environment.

Objectivity coupled with a holistic perspective of the organisation mean that a well-informed internal audit function might recognise danger before the board. Optimism and experiential bias, group think, and strong characters can cause early warnings to be missed. During a crisis, internal audit can leverage existing strong relationships at all levels to advise and support.

Float = assessing the risks to take informed decisions to avoid knee-jerk reactions to the emerging risk and unfolding issues. Floating in a crisis directs resource to core activities to maintain stability providing breathing space. 

• Agility – maintain relevance of advisory and assurance activities.
• Data – take a data driven approach, validate and originate.
• Risk – supporting real-time identification and assessment.
• Collaboration – coordinating with other assurance providers for maximum benefit.

Survival in a crisis may take innovation or it may be as simple as keeping the wheels turning by hand. Internal auditors’ professional scepticism helps to cut through idealism to help the organisation focus on realistic, practical action. And internal audit can also roll its sleeves up and support operational areas – being pragmatic about objectivity and independence is important in a crisis.  

Follow = in open water this is about swimming/floating along a strong current until there is a break to cross safely to shore, it is also about accepting the need for help.  

• Opportunity – risk is not all downside in a crisis, take a balanced view, seek opportunities.
• Facilitation – help leaders to solve problems and find solutions.
• Confidence – competent in own ability and trusted by the organisation.

Internal audit has every potential to have the keys to the lifeboat.
But key skills must be second nature to be effective in a crisis. There’s no time to go on a course!

The question for all internal auditors is do you and your function collectively have these skills?
Another crisis will be around the corner.
Are you ready to flip, float and follow?