Slow down of the Indian economy has affected the growth prospects of the companies followed with higher risk towards financial as well as business risk. Both the risk are visible in the economy and in the coming years this current slowdown is going to affect severely the business strategies adopted by the companies based upon traditional or post crisis of 2008. The difference between post crisis 2008 and the current phase of the Indian economy is that today we are suffering the pains from all angles driven mainly internally. Further we are not knowledge enough to understand the risk categories. Hence business risk has taken a new shape and vulnerabilities of the same are optimized. Internal control and internal audit are the two aspects which need to be tightened across the board so that risk of the business gets mitigated. Innovative and complex business approach has increased the level of financial and business risk. We will discuss about the same later on.

Internal auditors are now more liable for any business risk or financial risk. But a prime question comes into the ladder that how one will measure the performances of the internal auditors since the end result only gets into lime light only when there is a crisis erupts in an organization. Audit committee forms the metrics through which one can get a clear idea about the how the internal auditors are performing. But in my research I find that audit committee needs the first hand of new strategies which would strengthen and look upon closely on the performance and risk mitigation aspect of the companies. Cost is a growing important part of the companies in today’s era. Hence cost accountants and internal audit should go simultaneously. Formulation of cost pricing as well as assessments of risk from strategy formulation should be an integral part of the internal auditors. Better understanding of the business and financial risk is more important rather risk mitigation.

For example in a globalised world when products are being introduced cost factors of producing the same in the exporting countries followed with financial risk and business risk from exporting countries risk needs to be calculated simultaneously. Many mid tier Indian companies are on the path of stepping into global markets. For them cross country business dealings are the highest level of risk. Internal auditors need to identify the risk from such cross country deals and block the loopholes accordingly. From financial perspective (NPV, IRR) might look attractive but from an internal control perspective it might be the reverse of all financial calculation.

Gone are the days when internal control internal audit used to be done behind the closed walls. Changing economic culture has increased the demand of internal auditors to be included into the policy frame work since they are having better knowledge about the risk aspects other than the CEO or COO of an organization.  The new role of the audit committee and internal auditors should be implemented Antifraud Programmes and Controls. The recent case of NSEL or the case of Satyam has increased the demand of implementation of Antifraud Programmes and Controls. Until internal auditors are included in the strategy frame work platform along with the other departments of the organization the risk mitigation would never materlised. The loopholes of every strategy need to be blocked by the internal auditors. Today’s antifraud environment is also characterized by a decided shift from compliance-driven identification and investigation of incidents to proactive prevention and detection embedded into an organization’s internal controls.

More over with the increasing technology based business process the internal auditor’s needs to have a better understanding of the loopholes of risk management. With the wheel innovation rolling at high speed the risk levels from any segment rises to a higher level. Complexity in business process and innovation in product segments leads to high levels of risk. This is the prime reasons behind internal auditors being included within the management team so that risk in mitigated. I find more than risk mitigation it is important to have a better understanding of the various business and financial risk. Since more the organization is well versed with the risk levels the more it will be able to mitigate the same.