The Davies Report – December 2015 Edition

Seasons greetings!

Thanks for taking time out to read our end of year wrap for Audit & Risk leaders.

In this edition we’ll be giving you a quick summary of what we’ve been doing over the last six months, some of our thoughts and tips for 2016.

In this edition:

  1. What we’ve been up to lately
  2. The Future of Audit
  3. Internal Audit strategic sourcing
  4. Risk Appetite
  5. Evolving role of the CRO and risk functions generally
  6. Disruption
  7. What Ghengis Khan can each us about emerging risk
  8. Four questions for 2016

What we’ve been up to lately

It’s been a very busy period since our last newsletter in June. Of particular note are the following engagements:

  • National roadshows, presentations and workshops on the future of audit
  • Helping with the strategic sourcing of internal audit for an ASX 20 company
  • Advancing some of the thinking on risk appetite statements with various companies
  • Coaching and supporting some amazing Chief Auditor / CRO talent
  • Work on business disruption and strategic risk
  • Our ongoing work with Audit and Risk Committees

We’ve included some of our insights from these engagements and our general review of the audit and risk landscape below.

The Future of Audit

“And my final prediction, in 2030 someone will finally laugh at one of my jokes.”

I was delighted to be asked to speak at CPA Congress this year on the future of audit, and in particular what audit might look like in 2030. This presentation comes off the back of a national survey and focus groups we did for IIA-Australia with audit leaders around the country and our work on business model disruption.

Using elements of the Resilient Futures model we took the audiences through our top 10 things to know about disruption (see below), did a futurecast on a range of things that might play out to 2030 and therefore what this might mean for audit (both internal and external).

To access the complete report, please complete the form below.

Internal audit strategic sourcing

“Are your in-house teams auditing payroll and procurement? If so, why?”

The insource / outsource debate has ebbed and waned over the years. These days the case for 100% in-house or 100% outsourced is rare and a blend is highly desirable. The question then turns to what to keep in-house, what to push to the market and how to structure each component. We take our clients through a workbook to help them through this thinking in structuring teams, sourcing arrangements, specifications, contract structures, and the procurement process.

Having done a number of these over the years we draw three conclusions:

  1. Not one size-fits all
  2. There are traps for new players
  3. Sourcing can be an expensive and time consuming exercise with knock-on effects if not performed well. This is incredibly common and leads to underperformance. 

To access the complete report, please complete the form below.

Risk appetite

“There’s no riskless growth on offer here.” Glen Stevens, AFR 16 December 2015

We’ve talked in these pages about risk appetite previously. 

There’s a lot of views on what risk appetite is, what it isn’t and how to make it practical.

We find it helpful to make the distinction between

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Evolving role of the CRO and of risk functions generally

“We’ve invested in risk for some years now, where’s the payback?”

Closely tied with this is the evolving role of the CRO. There is a retooling in many organisations not dissimilar to that faced by Chief Auditors in Australia ten years ago. 

Modern CROs drive the framework and strategic discussion at the board and executive and and can elevate themselves above the the necessary and important “handle turning” while also making sure these processes are running well.

Key questions for any organisation:

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“Resilient Futures has written the book on disruption.”

Yes, literally… they’ve got a book out and the authors were kind enough to give me the opening first pages as the foreword.

As we’ve said in these pages for more than eight years, strategic risk is where value is created and lost and needs to be the focus for all organisations. Business model disruption and digital disruption are just the latest incarnations of this. 

While the term disruption is at risk of being trotted out by some and worn out by others, feedback is that their latest work – Disruption – Strategy for Exponential Change is a practical page turner that helps organisations get prepared and leverage disruption for the better.

They’ve negotiated to make the first two chapters available free of charge, so I encourage you to take advantage and if it resonates with you to get a copy of the book.

We’ve also included Todd’s top 10 things to know about disruption from our CPA congress presentation to get you thinking over the (southern) summer break.

What Ghengis Khan can teach us about emerging risk

Allegedly one of the key reasons that Ghengis Khan was so successful at controlling so much territory so quickly was that… 

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Four questions for 2016

In our first meetings with any new client we usually ask four key questions in order to help set the agenda for the coming 12 months. The summer break is a great time for reflection and planning, so we thought we’d share those with you.

To access the complete report, please complete the form below. 

Don’t keep it to yourself

Todd Davies & Associates is vehemently anti-spam, which means this newsletter only goes to clients and those who have opted in. If you found this useful it’d be a shame to keep it to yourself and we’d be grateful if you’d pass it on to your committees or executives responsible for audit and risk.

Thanks for your support and festive greetings

Thanks for your support during 2015, it is what keeps us going.

We wish you a happy and safe Christmas season and look forward to working with you in the new year.

Other than pre-existing commitments our office will be closed from December 21 through to January 8. If you need assistance during this period, please do get in touch in the normal way and we’ll get back to you on our return.

Todd Davies and the TDA team