“Risk managers and internal auditors play an important role of coordination and cooperation to build an effective and resilient cyber security system within an organisation,” ECIIA President Henrik Stein says. ”We hope to convince organisations and regulators about the importance of a strong governance model to mitigate cyber risks.”
The guidance outlines a comprehensive risk management approach to cybersecurity, a cyber awareness program covering everyone in the organisation from top to bottom and, most important, the interactions between the three lines of defense to facilitate the communication to the board that is ultimately responsible for the oversight of the cyber governance framework.
Cyber risk was the most commonly cited threat by heads of internal audit across Europe regardless of nationality or business sector, according to a new report written by some members of ECIIA.
The EU’s General Data Protection Regulation and the broader challenge of managing data came second in the surveyRisk in focus: hot topics for internal audit 2018. The pace of innovation businesses face was the third most widely cited risk concern.
“The defining theme of this report is the fundamental impact that technology has in shaping, enabling and disrupting organisations’ operations and strategies,” Farid Aractingi, ECIIA President said. “This is a pressure that requires internal auditors to learn new skills and adopt innovative tools to bolster their capabilities in an increasingly digital world.”
The report’s research team interviewed chief audit executives (CAEs) from major organisations in six European countries – France, Italy, the Netherlands, Spain, Switzerland and the UK.
Not surprisingly there were some regional differences. CAEs in the UK and Spain said that political uncertainty could expose their organisations to fresh threats and opportunities. In the UK, these views were largely prompted by the prospect of Brexit; in Spain they arose within multinational businesses having expanded into Mexico and the implications of the Trump administration’s hostile position towards the country.
Those in the financial services sector showed more concern over regulatory complexity than any other industry. Notably, for CAEs at institutions in France, Italy, the Netherlands and Spain the continuing development of the European Central Bank’s three-year old Single Supervisory Mechanism was cited as a risk.
Europe’s current legislation on cybersecurity does not include robust corporate governance processes to help businesses manage cyber risks across their operations, ECIIA says.
ECIIA calls on the European Commission (EC) to develop legislation and guidance frameworks to promote integrated, cross-departmental approaches to manage cyber risks, in its response to the body’s recent consultation exercise. It says a wide range of partners within organisations need to co-ordinate their efforts in this area including compliance, finance, human resources, internal audit, IT and legal functions.
“There is a real gap in this area that needs to be plugged,” Henrik Stein, ECIIA President, says. “Without joined up thinking and action on cyber security, businesses are at greater risk than they should be.”
He says that senior management should track and report on the business impact of cyber threats and all risk management activity. “For its part, internal audit evaluates the effectiveness of cyber threat risk management and reports to the audit committee and board on these issues,” he adds.
ECIIA recognises that organisations that operate in multiple jurisdictions face additional problems because reporting requirements remain unharmonised. It says there is a case for developing global best practice and standards to help corporations monitor their global reporting on cyber security and risk effectively.
The ECIIA’s response also comments on the most pressing current cybersecurity risks and those that it believes will become more prominent over the coming five years. Read the full response here.