The Future of Internal Audit, Risk Management and Controllership: Leading the IRO Assessment

In today's rapidly evolving business landscape, the assessment of Impacts, Risks, and Opportunities (IRO) has emerged as a critical framework that's reshaping how organisations approach sustainability and risk management.

Why IRO Assessment Matters

IRO Assessment is a fundamental shift in how companies evaluate their interactions with the world. By systematically analysing:

• Impacts: Direct and indirect effects on environment, society, and governance systems
• Risks: Threats stemming from ESG and other factors
• Opportunities: Value creation possibilities through sustainable innovation

Organisations gain a holistic view that extends beyond traditional financial metrics, enabling more resilient business strategies.

The Pivotal Role of Internal Audit (IA) & Risk Management

Internal audit and risk management functions are uniquely positioned to lead this transformation:

1. Methodology Masters: IA and Risk professionals already possess the analytical skills to evaluate complex impact pathways and risk relationships—the foundation of double materiality assessment.
2. Process Integration: IA can ensure IRO assessment becomes embedded in core business processes rather than existing as a siloed compliance activity.
3. Assurance Providers: As regulatory requirements evolve, third-party assurance of sustainability information becomes mandatory. Who better to ensure robust processes than those already focused on internal controls?
4. Data Validation: Risk management teams can apply their expertise in data integrity to the often complex metrics required for IRO reporting.
5. Strategic Advisors: By understanding material impacts and opportunities, these functions can elevate their role from compliance monitors to strategic business partners.

The Path Forward

For risk and audit professionals looking to stay relevant and valuable:

• Expand your knowledge of sustainability standards (ESRS, ISSB, etc.)
• Develop competencies in double materiality assessment
• Advocate for integrating IRO evaluation into existing ERM frameworks and IA methodology
• Collaborate with sustainability teams rather than creating parallel processes

The recent EU simplification proposals don't diminish the importance of IRO assessment—they make the role of existing risk functions even more critical in creating efficient, effective approaches.

This isn't just a compliance trend; it's the future of how organisations understand and manage their total impact and value creation. Those in risk and IA who embrace this evolution will find themselves at the centre of strategic decision-making “strategic advisors”

What steps is your organisation taking to integrate IRO assessment into existing IA and risk management frameworks? I'd love to hear your thoughts or reach out if you'd like to learn more about IROs and relevant AI-powered technology: see more https://www.dhirubhai.net/posts/levelupesg_levelup-esg-the-erp-for-esg-ugcPost-7299393641020616704-6lnk?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAO258ABhJR1VrybYz9yagX6PjYLgNABoF4

#Sustainability #InternalAudit #IntegratedRiskManagement #ESG #DoubleMateriality #CSRD #IRO #LevelUpESG

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