How to Conduct a Risk Assessment in an Agile Audit Approach

By Toby DeRoche CIA, CCSA, CRMA, CFE, CISA, cAAP

Internal auditors face significant challenges in keeping pace with the dynamic nature of organizational risks. Traditional audit methodologies, which rely heavily on extensive audit universes and process-driven evaluations, can quickly become outdated and ineffective. To stay relevant and effective, audit teams are increasingly adopting agile audit methodologies. At the core of this approach is the agile risk assessment—a focused, strategic, and streamlined method designed to pinpoint and prioritize risks that truly matter.

Traditional VS Agile Audit Approach

Traditionally, internal audit functions have attempted to achieve comprehensive coverage through extensive audit universes, catalogs of all possible auditable entities and processes within the organization. However, this comprehensive coverage often led auditors to become bogged down in excessive detail, overlooking the actual risks that posed significant threats to organizational objectives. Agile auditing solves this fundamental problem by shifting the focus from processes to specific, strategically important risks.

An agile audit approach begins by defining a risk universe, rather than the traditional audit universe. The risk universe comprises clearly defined risks that are directly tied to the organization's strategic goals and objectives. This shift from a process-centric to a risk-centric approach is crucial. It ensures auditors focus on actionable, specific risks rather than broad, vague categories, such as operational, financial, or compliance risks, which, by their nature, are too extensive and nonspecific to be effectively audited.

Agile auditors prioritize understanding risks that directly impact strategic initiatives, focusing attention on areas that could derail the successful achievement of organizational goals. For example, when evaluating a critical financial initiative aimed at entering a new market, agile auditors wouldn't audit the entire project broadly or assess generalized compliance risks. Instead, they would focus exclusively on specific, identifiable risks such as potential regulatory hurdles in the new market, the reliability of financial projections, or market competition dynamics. This targeted approach allows auditors to deliver meaningful insights quickly and accurately, enabling management to take immediate corrective actions where necessary.

Implementing Agile Audit Risk Assessments

Implementing agile risk assessments requires auditors to adopt a more dynamic and flexible approach. Agile methodologies typically involve continuous monitoring and frequent reassessments, allowing the audit function to adapt quickly to evolving risks and priorities. Unlike traditional annual risk assessments, agile assessments are iterative and responsive to changing needs. They support continuous updates based on real-time data and changing business circumstances, ensuring audit plans remain relevant and strategically aligned with organizational objectives.

Benefit of Agile Audit Risk Assessment

One significant advantage of agile risk assessments is their ability to leverage collaboration across various internal groups, such as Enterprise Risk Management (ERM), compliance, and cybersecurity teams. By drawing insights and risk intelligence from multiple sources within the organization, auditors can build a comprehensive yet targeted view of critical risks. Such collaboration also helps to reduce duplication of efforts, enabling auditors to allocate their resources more efficiently and effectively.

Another key component of an agile risk assessment is transparency and clarity in communicating risks. Agile auditors emphasize clarity and precision in defining and presenting risks. Clear articulation of risks—what they are, their potential impact, and mitigation measures—facilitates better understanding and decision-making by stakeholders and executive leadership. This enhanced clarity ensures that audit recommendations are practical, actionable, and aligned with strategic imperatives.

Agile audit approaches also significantly enhance auditor agility and responsiveness. Agile auditors, equipped with focused risk assessments, can pivot swiftly in response to emerging threats or changing business priorities. For instance, if an unforeseen cybersecurity vulnerability emerges, an agile audit team can quickly redirect its focus to assess the specific risks associated with this vulnerability, providing timely recommendations to safeguard critical assets.

Adopting an agile approach to risk assessments requires cultural shifts within the audit function itself. Auditors must adopt a mindset that values flexibility, continuous learning, and collaboration. Agile auditors should be comfortable with iterative processes, frequent adjustments, and proactive engagement with various business units. By cultivating such a mindset, internal audit teams can better support dynamic business environments, adding real strategic value rather than merely providing retrospective assurance.

To implement agile risk assessments successfully, audit teams should:

Identify and define clearly actionable risks directly aligned with organizational strategy.
Shift from broad, categorical risk assessments toward targeted evaluations of specific, strategically relevant risks.
Foster collaboration with other internal functions to leverage comprehensive risk intelligence.
Adopt iterative, responsive assessment methodologies, allowing rapid realignment in response to emerging risks.
Emphasize transparency, clarity, and practical recommendations in audit communication.

Agile risk assessments represent a significant evolution from traditional methods, providing internal auditors with a strategic advantage. By focusing on specific, impactful risks tied directly to organizational objectives, auditors enhance the relevance and effectiveness of their audits. Moreover, by adopting continuous, iterative assessments, auditors can better respond to rapidly changing business environments, providing timely insights that facilitate proactive risk management.

In conclusion, adopting an agile audit approach fundamentally transforms internal auditing. Rather than becoming mired in expansive, process-driven audits, agile auditors zero in on strategic risks, directly contributing to organizational success. By prioritizing agility, clarity, and collaboration, agile risk assessments equip auditors to navigate today's fast-paced business landscape effectively. Internal audit teams that embrace this agile approach are well-positioned to deliver strategic value, guiding their organizations through uncertainty and toward sustained success.

If you are ready to learn more about Agile Auditing, check out the Certified Agile Auditor Professional certification.

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Your Instructor

Toby DeRoche

Toby DeRoche is a Certified Internal Auditor (CIA) who holds an MBA with an Internal Audit specialization from Louisiana State University. He is also certified in Control Self-Assessment (CCSA), Risk Management Assurance (CRMA), Internal Control (CICA), Fraud Examination (CFE), and he is a SAFe 5 Agilist (SA).

His professional background includes identification and documentation of weaknesses that result in heightened business risk, while recommending solutions to such situations. Toby began his career in internal audit with Macy's Inc. He then worked as an implementation and training consultant for Wolters Kluwer. As a Solution Consulting Manager at Wolters Kluwer, Toby works with organizations that are looking for software solutions to their audit, risk and compliance needs. Throughout his career, Toby has assisted numerous internal audit departments create, perform, and supervise financial, operational, and compliance audits to evaluate control frameworks, financial systems and operating procedures.

Toby is also an experienced author and presenter, having delivered over 50 continuing education presentations to audit, risk, and fraud professionals.

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How to Conduct a Risk Assessment in an Agile Audit Approach

Field: Auditing | Delivery Method: Self Study | CPE Hours: 0.25