According to a recent survey conducted by Gartner, Chief Audit Executives (CAEs) have identified risk orientation, stakeholder management, and team leadership as the top three characteristics of the most effective individuals in their field. The survey, which involved 114 CAEs across 180 areas, aimed to identify the most important measures of an effective CAE.
Gartner identified six significant factors that contribute to the effectiveness of a CAE. These factors include management satisfaction, CAE and audit department performance, perception of the CAE, audit engagement quality, CAE impact, and team engagement. The effectiveness of a CAE can be measured by important organizational risk outcomes, such as risk-informed decision making, the number of surprise risk events, recovery times after risk events, and delivering a coordinated risk response.
Among these factors, risk orientation was found to be the single biggest driver of high CAE personal effectiveness scores. CAEs with a high-risk orientation improved their personal effectiveness by up to 47%. Risk orientation involves aligning the CAE’s audit plan with top enterprise risks and ensuring that audit’s risk assessment aligns with other functions. Additionally, audit recommendations should be well-aligned with the enterprise’s risk appetite. The study concluded that everything internal audit does should be oriented towards risk. Interestingly, effective CAEs were also found to be more likely to actively participate in enterprise risk management (ERM).
Stakeholder management was another significant driver of CAE personal effectiveness, with a potential improvement of up to 30%. This aspect involves maintaining regular informal discussions with key stakeholders and having an empathetic understanding of their motivations and priorities. Effective CAEs monitor the concerns of these stakeholders and have a good understanding of how they are perceived by others. The most effective CAEs view themselves as strategic executives and establish a strong rapport with stakeholders throughout the enterprise.
Team leadership was identified as another crucial characteristic of effective CAEs. Coaching team members towards their goals, helping them develop in their roles, and encouraging them to communicate with counterparts in different areas of the business are all essential aspects of effective team leadership. An effective team leader fosters an open culture where team members feel comfortable sharing thoughts and ideas and helps them make connections that will aid in their development.
Overall, the findings of this survey highlight the key characteristics that contribute to the personal effectiveness of CAEs. By focusing on risk orientation, stakeholder management, and team leadership, CAEs can enhance their effectiveness and drive better organizational risk outcomes. It is clear that these characteristics are closely linked to an understanding of enterprise risks, a strong rapport with stakeholders, and effective team management. As organizations continue to navigate an increasingly complex and risky business landscape, having CAEs with these qualities will be crucial to ensuring success.