Our purpose was to capture the changing risk management paradigm and to discover new insights and techniques that could be used to integrate these concepts into a more effective internal audit process. Both internal auditing and risk management are co-evolving with the ascendance of global business risk as a major corporate governance issue. A paradigm is a set of rules or a way of looking at the world. Different people with different paradigms look at the same set of data and reach different conclusions. An appropriate paradigm fits with the environment and the process thrives.
Inappropriate paradigms are wasteful or ineffective.
Internal auditing as practiced in the developed countries has passed through two dominant paradigms and is poised on the edge of a third. The first internal audit paradigm focused on observing and counting. For centuries, internal auditing was equated with counting and observing physical items or numbers representing them. In 1941, Victor Brink introduced a new concept of the system of internal control and changed the internal audit paradigm from a focus on reperformance to a focus on controls . We are at another crossroads today, and a new paradigm for internal auditing is emerging.