Chief audit executives cite the war in Ukraine as the number one macroeconomic and geopolitical risk facing businesses today.

This is among the findings of a poll of over 800 chief audit executives commissioned by the Chartered Institute of Internal Auditors, whose study identifies the top ten risks to businesses most impacted by the war in Ukraine as:

1. Macroeconomic and geopolitical uncertainty (79%)
2. Cyber security and data security (77%)
3. Business continuity, crisis management and disaster response (58%)
4. Supply chain and outsourcing (57%)
5. Financial, liquidity and insolvency risks (52%)
6. Change in laws and regulations (33.09%)
7. Communications, reputation and stakeholder relationships (24.94%)
8. Health, safety and security (24.7%)
9. Fraud, bribery and the criminal exploitation of disruption (21.58%)
10. Climate change and environmental sustainability (15.35%)

The Chartered IIA is using this new research to renew its calls on the government to accelerate reform of the audit and corporate governance framework and bring forward an Audit Reform Bill, arguing that high quality and effective audit is essential to support boards to navigate the myriad of business-critical risks they are now facing.

CEO of the institute, John Wood, said: “Our poll shows that the war in Ukraine means businesses are now facing the perfect storm of geopolitical and macroeconomic related risks, elevating geopolitical uncertainty to the top of the risk agenda.

“The research also demonstrates that geopolitical and macroeconomic risk does not sit in a silo, but instead interlinks and exacerbates a whole range of other business critical risks, including cyber security, business continuity and crisis management, supply chains, and financial, liquidity and insolvency risk.

“With businesses now facing an adverse business risk environment that we have not seen for decades, this also underlines the urgent need for the Government to stop kicking the can down the road and crack on with audit and corporate governance reform. High quality and effective audit is essential in supporting boards and investors to navigate the financial challenges ahead and vital for our economic resilience. We therefore urge Ministers to accelerate plans for an Audit Reform Bill.”

John Devine, risk committee chair, abrdn added: “There can be no doubt that the War in Ukraine has created significant business disruption, exacerbating a myriad of business-critical risks.

“At abrdn, it tested and affirmed the strength of our protocols and showed we were well positioned to deal with what was a volatile and complex market event. This included having to quickly get to grips with the impacts of economic sanctions, ensuring we comply with new legal requirements, and keeping our eye on the ball in terms of the macroeconomic environment we are now operating in with rising inflation and interest rate rises.

“With the economic outlook looking volatile for the foreseeable future, it is more important than ever for businesses to make sure they are identifying, mitigating and managing their geopolitical related risks effectively. In this rapidly changing environment internal audit functions must be flexible and willing to react swiftly in delivering high quality audit reports on new risks as they emerge in real time.”

The CIIA's research was based on a quantitative survey of 834 chief audit executives from 15 European countries including Austria, Belgium, Bulgaria, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Slovenia, Spain, Sweden, Switzerland and the UK. The poll was part of a wider study, Risk in Focus 2023, the findings of which will be published in September 2022.

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