This definition incorporates the managerial and strategic elements of risk and opportunity in achieving goals along with risk management and audit elements about materiality. The New Paradigm Managers are operating in an increasingly complex and global environment, and risk is a central element of corporate governance. The emergence of risk management as a key organizational process gives the internal auditing profession a unique opportunity to shift its focus to risk. A new paradigm has emerged from our research that will have lasting effects on the practice of internal audit professionals. The new paradigm recognizes that risk is the driver of organizational activity.
Corporate governance is the organization's strategic response to risk.
The new paradigm also recognizes that organizational responses to risks are industry-specific. There is no magic matrix or perfect crystal ball. Instead, there is a sharing of information and a built-in flexibility to deal with uncertainty both broadly and specifically. A framework and language for discussing risk among managers and auditors. A process to open up the imagination about significant risk potential.