Risks and benefits in the digital business environment

Risks and benefits in the digital business environment

Author: Alina Fanita, CEO & Partner, PKF Finconta

Companies have responded to the crisis in different ways. Many have had to automate how they work with customers to mitigate the risks brought on by the pandemic. Other companies have switched to digital processes to make it easier for employees to work remotely. Restrictions have led to disruptions in the supply chain and have led to adjustments in relations with suppliers. This is why many companies now make transactions and make decisions in real time, which also requires these organizations to manage risks and seize opportunities with speed, accuracy and efficiency. Given the accelerating changes of the last two years, today's digital age auditors must also adopt a digital mindset.

Risk: Dependence on digital systems

According to a report by the World Economic Forum, "increasing dependence on digital systems" is a growing risk in 2022. The same report says that this dependence has been "intensified by the response to COVID-19". Digital com-merce is estimated to reach a global value of $ 800 billion by 2024, and this growth will bring major operational chang-es and generate new types of digital risk. Digital products and services are based on a wide range of technological assets – data, software, cloud services, interfaces – that can be weakly controlled by third parties.

Companies that address these digital risks will gain a competitive advantage through better performance and stronger resilience. The question is, "How can we quickly discover these new digital risks and how can we effectively address them?" The answer is through an integrated management approach that links strategic, operational and technological risks to enable informed decisions.

Benefit: Connectivity supports digital audit

Business connectivity is becoming stronger, making data sharing between companies, customers and government agencies a standard practice. As connectivity grows, digital operational, transactional and financial data is increasingly reaching shared networks. Auditors can connect directly to these shared networks and work directly through a secure online platform, which greatly speeds up the audit process. Customers no longer have to manually transfer massive data files and communicate via email, as all parties involved in an audit can now manage and view their data on a single shared platform or customer portal.

Risk: Coexisting technologies, old and new

Extensive research has been conducted on how risk and compliance management experts could improve their gov-ernance solutions to allow for better visibility and understanding of risks. The findings show that the focus on compli-ance, as well as coexisting technologies, old and new, fails to provide business leaders with the information they need to address the company's most relevant digital risks. Thus, it has become increasingly clear that an integrated ap-proach that links operational and technological risks to the strategic objectives of the business is stronger. Business leaders need to explore how integrated risk management technologies can help companies move beyond old, compli-ance-based solutions to increase their visibility and understanding of digital risks.

Benefit: Processing large volumes of data

Although the large volume of data generated by data sharing platforms may make it more difficult to identify risks, audi-tors benefit from new approaches to the processing of data and information in various categories of documents. A high quality audit process can process and interpret data in meaningful and consistent ways, helping companies identify anomalies, operational, financial and non-financial risks.

Why is data analysis so important? First, the high processing speed and capabilities of data processing technologies can cover the entire data population. This comprehensive coverage provides even greater assurance on governance and compliance, and auditors are able to do more in-depth analysis to discover new perspectives and areas for busi-ness improvement. Data analysis technologies are also able to perform a "continuous audit", allowing audit efforts to be distributed throughout the year.

In conclusion

Performing a digital audit involves more than just using digital tools and technologies in the audit process. A digital audit requires the adoption of a truly digital mindset. Having a digital mindset means developing new attitudes and behaviors that allow auditors - and clients - to anticipate opportunities, while becoming more adaptable and open to capitalizing on emerging technologies to enhance traditional processes.

About PKF Finconta

For more than 27 years, PKF Finconta is one of the 10 leading professional services companies in Romania. Since 2006, we are a member of PKF International Limited. PKF International is a leading international business advisory organization. The company grew consistently over the years, forming a Group of four companies: PKF Finconta, PKF Finconta Consultanta, PKF Finconta HR, and Finconta Consulting SPRL, members of national professional organizations CECCAR, CAFR, CCFR, and UNPIR. We provide a wide range of business advisory and related specialist services. We have seven core areas of expertise and within these areas, we tailor our services to your business and your needs: audit, corporate finance, tax, bookkeeping, and accounting advisory services, transfer pricing, payroll and personnel administration, and insolvency.