FIIA 2019 – Best Execution MasterClass & Workshop for Internal Auditors in Financial Institutions, 07 - 08 February 2019, Vienna, Austria
The current banking regulatory paradigm requires Internal Audit and its Chief Audit Executive, as the 3rd Line-of-Defense, to play a leadership role in assisting and ensuring Supervisory and Executive Boards (Non-Executive and Executive Directors) to perform their roles and responsibilities. The new demanding regulatory landscape impacting banks’ business models, including restrictions resulting from demanding capital and liquidity requirements (CAR – Capital Adequacy Ratio and LCR – Liquidity Coverage Ratio), IFRS 9, and lending capacity adjustments resulting from RWA – Risk Weighted are notably relevant challenges.
Objectives and role of Internal Audit become particularly challenging, as the pressure on costs and the need to increase the headcount in Risk and Compliance functions is restricting the minimum headcount requirements of Internal Audit, the need for more demanding skills of Internal Auditors, namely in areas that were not of concern in the previous paradigm. As a lateral impact, Internal Audit faces often restrictions in supporting Non-Executive and Executive Directors in performing their roles.
Therefore, is critical for the Chief Audit Executives to develop a vision, strategy and tactics to build negotiation arguments to allocate talent, time and resources to a rigorous and robust audit plan. This requires redesigning Internal Audit strategy and tactics, prepare a robust narrative to discuss with Supervisory and Executive Boards, and ensure that the 4 Lines-of-Defense are operating efficiently and effectively.