Cybersecurity Risk Becoming a Mainstay in Annual Audit Plans

Organizations are now more likely than ever to evaluate cybersecurity risk as part of their annual audit plans, according the 2016 Internal Audit Capabilities and Needs Survey report released by Protiviti.

The report reveals that nearly three out of four organizations (73 percent) now include cybersecurity risk in their internal audits, a 20 percent increase year-over-year.

While there is a clear need among most internal audit groups to strengthen their ability to address cybersecurity risk, the survey found that these capabilities are much stronger for top-performing organizations, particularly those in which the board of directors has a high level of engagement in information security risks.

“Our survey found that when it comes to cybersecurity and auditing processes, the highest performing organizations have audit committees and boards who actively engage with the internal audit function during the discovery and assessment of these risks," says Brian Christensen, executive vice president, global internal audit, Protiviti. 

"It’s still apparent, however, that further work is essential to build out these internal audit capabilities. Companies must take stronger action to set these imperatives into place.”

Cybersecurity Risk Capabilities and Best Practices

During the past decade, the importance of cybersecurity in internal audit functions has evolved from a simple IT risk to a serious strategic business risk, an issue that now must be addressed regularly by executive management and the board of directors.

In fact, 57 percent of companies surveyed have received inquiries from customers, clients and/or insurance providers about the organization’s state of cybersecurity.

Protiviti’s survey found that there are two critical success factors when establishing and maintaining an effective cybersecurity plan: a high level of engagement by the board of directors in information security risks; and including the evaluation of cybersecurity risk in the current audit plan.

Companies with at least one of these success factors in place have a stronger risk posture to combat cyber threats. For example, 92 percent of organizations with a high level of board engagement in information security risks have a cybersecurity risk strategy in place, compared to 77 percent of other organizations.

Similarly, 83 percent of companies that include cybersecurity risk in the annual audit plan have a cybersecurity risk policy, versus 53 percent that do not include cybersecurity risk in their audit plans.

Ten years of internal audit

Over the past ten years, internal audit professionals have assessed their competency in more than thirty areas of audit process knowledge and general technical knowledge in Protiviti’s survey. Areas that continue to surface as top priorities year-over-year include: ISO 27000, data analysis technologies, various areas of auditing IT, technology-enabled auditing and fraud risk management.

As for 2016, technology issues dominated the priority list for internal auditors. The top 10 priorities for internal audit are:

1. ISO 2700 (information security)
2. Mobile applications
3. NIST Cybersecurity Framework
4. GTAG 16 – Data Analysis Technologies
5. Internet of Things
6. Agile Risk and Compliance
7. ISO 14000 (environmental management)
8. Data Analysis Tools – Statistical Analysis
9. Country-Specific ERM Framework
10. Big Data/Business Intelligence

“With most of the top priorities identified relating to IT risks, it’s clear that auditing IT has never been more important to internal audit functions and to the state of an organization’s overall risk profile,” added Christensen.

“The rapid introduction of new technologies, combined with the growing frequency and magnitude of corporate cybersecurity lapses, is driving internal audit to increase its IT audit capabilities each year. With internal audit now at a tipping point, these top priorities are more important than ever before. If the internal audit function doesn’t keep up with the growth and innovation of companies, it will be left behind. The time to act is now.”