Cybersecurity Risks and the Role of Internal Audit

With the increasing use of the internet in people's everyday lives and businesses, cybersecurity has been deemed one of the most critical challenges of the modern world. Newer cyber threats are much more complex, and they put at risk not only monetary systems but also ideas, consumers' info, and working assets. With these threats in mind, organizations are under increasing pressure to defend their tangible and intangible resources and retain the confidence of their stakeholders. Internal audit functions must transform and assume an enhanced responsibility for analyzing and addressing cybersecurity threats. As Charles (2019) highlighted, an internal auditor plays a critical role in ensuring adequate controls against cyber threats have been put in place, tested for effectiveness, and integrated into the organization's risk management frameworks.

The Escalating Threat Landscape

Cybersecurity threats have soared with organizations' high dependence on digital platforms, cloud services, and emerging technologies. These new breeds of cyber threats are more complex, thus demanding more robust and dynamic security measures and solutions to counter them (Lois et al., 2021). Phishing, ransomware, and inside and advanced persistent threats (APTs) attack financial data with intellectual property and business operations, placing cybersecurity as a significant component of business continuity.

According to Charles (2019), internal auditors must develop proficiency in managing an organization's risk profile to establish its cyber security's efficiency in dealing with new risks. This includes the assessment of cybersecurity policies, procedures, and technical controls, that is, the degree of sufficiency they bring to protect valuable resources. It will be recommendable for auditors to assess the adequacy of firewalls deployed, encryption measures, multi-factor authentications, and incident response measures. Also, they should evaluate the organization's readiness and response towards cyber events and make sure that sufficient measures are put in place to prevent or minimize loss and to quickly bounce back from a cyber-attack (Betti, 2021). In this regard, internal auditors assist organizations in being ahead of these threats by scrutinizing these elements to ensure that systems and data are protected against potential breaches.

The Evolving Role of Internal Audit in Cybersecurity

Internal audit is a crucial component in an organization’s overall cybersecurity preparedness. According to Lois et al. (2021), audit responsibilities include monitoring technical controls such as firewalls, encryption, and the organization's cybersecurity governance framework. This means that auditors need to assess and review whether an organization offers effective cybersecurity bolstered by clear policies, rigorous and relevant employee training, and, bolstered by enough resources. Auditors should also determine how cybersecurity threats are reported, and the level of awareness boards have on cybersecurity matters.

Besides, auditors also have a crucial part in the implementation and monitoring of data protection rules, including the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) (Carlson et al., 2020). Hence, auditing for compliance with this regulation is essential to prevent the organization from facing legal challenges and to safeguard the image of the organization. In addition to compliance, following these regulations ensures customer reliability by proving the organization's solid focus on protecting people and sensitive data, which would help improve protection against cyber-attacks.

Mitigating Cybersecurity Risks

Cybersecurity risk is effectively managed in organizations with the assistance of internal auditors. The primary way to achieve that is to conduct frequent cybersecurity audits to reveal all the problematic issues and guarantee that appropriate measures are taken immediately. Charles (2019) emphasizes that auditors must collaborate with IT and security departments to identify specific risks present in an organization. This allows auditors to ensure that conventional security controls like firewalls, encryption, and multi-factor authentication are implemented to deal with the finest cybersecurity risks.

Other than examining risks, auditors should also consider how the organization is placed to respond to cyber events. This requires a critical assessment of the strategies to be taken in case of an incident that the plan adopted is adequate, tested for effectiveness, and updated in line with the growing threats. Besides, auditors must also assess the organization's backup and recovery process to ascertain that, in the event the organization is attacked by hackers or another data incursion, essential data will be retrievable within the shortest duration possible so that the organization's operations are not severely impacted (Betti, 2021). These measures ensure minimal ground is given to cyber threats and the organization's digital assets are protected.

Challenges in Auditing Cybersecurity

Cybersecurity auditing is a challenging task with different aspects, making it a complex process. According to Charles (2019), one of the most critical problems is the presence of new threats on the internet. Cyber threats are dynamic and become more complex as the new year comes with new threats and vulnerabilities. Therefore, auditors should constantly update themselves with cybersecurity tools, trends, and technologies (Slapničar et al., 2022). This is a dynamic environment that implies that auditors should continuously learn and cooperate with cybersecurity practitioners to have a proper understanding of the new risks.

The other significant difficulty of auditing cybersecurity is that it is sometimes difficult to understand the technical controls that protect an organization's data and systems. Auditors must be acquainted with complex technical controls like encryption policies and standards, firewalls, intrusion detection systems, and data loss prevention solutions (Lois et al., 2021). This technical knowledge is crucial to determining whether these controls work and offer sufficient security against today's cyber threats.

Also, the auditors must be assured that the implemented and documented cybersecurity controls are appropriate to the enterprise risk management strategy of the organization. Over the past few years, data storage and protection from different forms of illicit unauthorized access have become critical issues that must be tackled in collaboration with other business strategies and overall regulatory frameworks (Betti, 2021). It establishes that investments in cybersecurity are being made judiciously, focused on critical areas, and exposed to maximum organizational threats and risks.

Conclusion

With new and constantly emerging threats, internal audits have the crucial function of defending organizations from cyber threats. Internal auditors protect the organization's resources and reputations by identifying inefficiencies in cybersecurity measures, reviewing adherence to data protection legislation, and ascertaining the organization's readiness for cyber threats. Findings highlight the significance of constant learning and cooperation among auditors and cybersecurity specialists to be capable of powerful evolving threats as well as helping organizations maintain the stability of cyber threats.

References

Betti, N., & Sarens, G. (2021). Understanding the internal audit function in a digitalized business environment. Journal of Accounting & Organizational Change, 17(2), 197-216. https://www.emerald.com/insight/content/doi/10.1108/JAOC-11-2019-0114/full/html

Carlson, G., McKinney, J., Slezak, E., & Wilmot, E. S. (2020). General Data Protection Regulation and California Consumer Privacy Act: Background. Currents: J. Int'l Econ. L., 24, 62. https://heinonline.org/HOL/LandingPage?handle=hein.journals/curritlj24&div=12&id=&page=

Charles, S. (2019). Charles Financial Strategies LLC. Charles Financial Strategies LLC. http://charlesfs.com

Lois, P., Drogalas, G., Karagiorgos, A., Thrassou, A., & Vrontis, D. (2021). Internal auditing and cyber security: audit role and procedural contribution. International Journal of Managerial and Financial Accounting, 13(1), 25-47. https://doi.org/10.1504/IJMFA.2021.116207

Slapničar, S., Vuko, T., Čular, M., & Drašček, M. (2022). Effectiveness of cybersecurity audit. International Journal of Accounting Information Systems, 44, 100548. https://doi.org/10.1016/j.accinf.2021.100548