Article
Proactive assurance FAQ: Key benefits and leading practices
Jan 16, 2025 · Authored by Benjamin Quigley, John Romano, Matt Reierson, Kelsey Renner
Proactive assurance helps organizations continuously monitor and address risks before they become critical issues. This FAQ provides insights into the key components, benefits and leading practices of proactive assurance, ensuring your business stays ahead of the curve and compliant with ever-changing regulations.
Particularly valuable in dynamic and high-stakes environments, proactive assurance is an internal audit approach that utilizes ongoing, real-time monitoring and assessment to focus on risk identification and mitigation in the planning stages of strategic initiatives. By addressing risks early, organizations can minimize disruptions, build resilient processes, ensure alignment with long-term goals and enable immediate corrective action to maintain both system integrity and business continuity.
Proactive assurance assesses alignment between partners, identifies potential risks and ensures both parties have compatible control mechanisms. This preemptive alignment fosters mutual trust and confidence while actively mitigating risks of non-compliance, operational inefficiencies and reputational damage Through the early detection of vulnerabilities, optimized system performance, strengthened compliance and improved decision-making, proactive assurance provides critically enhanced capabilities to manage risk efficiently.
What are the top strategies for implementing effective proactive assurance?
- Early involvement of internal audit: Integrate internal audit in the initial stages of strategic projects to identify risks related to governance, compliance and operational fit.
- Risk-driven focus: Prioritize areas with the highest potential impact (regulatory compliance, data security, reputational risks, etc.) and create targeted controls.
- Collaboration across functions: Engage stakeholders from IT, finance, operations and legal teams to provide comprehensive insights into potential risks.
- Use of data analytics: Employ data analytics to provide real-time monitoring of key metrics.
- Continuous feedback loops: Establish regular check-ins and reviews to maintain alignment with project goals, allowing for adaptive responses to new insights and evolving risks. .
- Documentation and knowledge sharing: Record insights, controls and recommended actions to create a knowledge base that supports future projects.
Proactive assurance in action
Many real estate investors rely heavily on third parties to perform business tasks such as financial reporting or property management, thus increasing exposure to unknown risks. Baker Tilly has worked with a global investment management firm to evaluate a potential joint venture partner who would also be responsible for managing the accounting and financial reporting of the venture. The firm wanted confidence the partner could maintain accurate records and deliver timely financial reporting prior to agreeing to the venture terms.
Baker Tilly collaborated with a cross-functional group of stakeholders to understand the potential partner’s control environment, evaluate cash management policies and practices, and identify challenges associated with meeting financial reporting expectations or timelines whether due to lack of formal process, limited personnel or insufficient oversight. The project resulted in the decision to supplement the partner’s accounting team with help from another firm to better handle the complexity and scale of the anticipated investment strategy of the venture. Challenges that may have been discovered two or three months into business activity were mitigated proactively, thereby avoiding disruptions after inception.
In addition to supporting cost savings in operations, proactive assurance reduces the risk of project delays, enhances control effectiveness, strengthens risk management capabilities, minimizes disruption, streamlines the path to achieving project milestones and ensures alignment with broader organizational objectives. Proactive assurance also plays a vital role in maintaining compliance by continuously monitoring key systems and processes: real-time identification of compliance gaps, automated alerts and continuous audits.
Proactive assurance repositions internal audit as a strategic advisor rather than a retrospective evaluator, thereby increasing audit’s visibility and influence in decision-making processes. As internal audit provides real-time insights, it becomes a valued partner in shaping outcomes, helping the organization anticipate and address risks before they become material issues.
Proactive assurance is particularly beneficial in industries where compliance, system reliability and data security are critical to business success. Industries with complex risk landscapes like financial services, healthcare, technology and insurance see significant advantages in proactive assurance due to strict regulatory requirements and rapid industry evolution.
Data analytics enhances proactive assurance by allowing internal audit to monitor high-risk areas continuously. This real-time analysis helps uncover trends, anomalies and emerging risks, enabling organizations to adapt controls dynamically.
- Automated risk detection: AI-powered algorithms will enable internal audit to automate the identification of unusual patterns or deviations in vast datasets, improving the precision of risk detection.
- Predictive risk modeling: AI can create predictive models to forecast risk scenarios and test control effectiveness, thereby strengthening resilience and contingency plans.
- Natural language processing (NLP): NLP will allow internal audit to analyze unstructured data sources, such as customer feedback and social media, to gain insights into reputational risks or compliance concerns.
- Process automation: AI can automate routine audit processes, such as data collection and initial analysis, freeing internal auditors to focus on strategic and value-added tasks.
The evolution of proactive assurance is marked by deeper integration with digital transformation initiatives, especially in areas like AI, data science and automation. Future trends include:
- Expansion of predictive analytics and machine learning: Proactive assurance will increasingly leverage advanced analytics and machine learning to anticipate risks in real time.
- Integration with real-time monitoring systems: Internal audit will utilize real-time monitoring systems across departments to get continuous updates on control performance, especially for regulatory compliance and financial reporting.
- Proactive regulatory compliance: With regulations becoming more complex, proactive assurance will play a key role in ensuring compliance before new rules take effect, thus avoiding costly fines and reputational damage.
- Broader cross-functional collaboration: By uniting risk management, compliance, finance and IT, organizations can build a robust risk-aware culture that supports long-term growth and innovation.
- Use of AI-enhanced decision-making: As AI becomes more prevalent, proactive assurance will incorporate AI-driven insights to make faster, more informed decisions. AI will support real-time scenario planning and ‘what-if’ analyses, equipping internal audit with advanced tools for assessing risk in dynamic environments.
Effective staff training is essential for the success of proactive assurance, and organizations should invest in comprehensive training programs:
- Regular training sessions: Scheduled training ensures staff are always up-to-date on the latest tools, regulations and industry leading practices.
- Certifications and professional development: Encouraging staff to pursue certifications in relevant technologies and methodologies can build a highly skilled assurance team.
- Hands-on workshops: Interactive workshops provide practical experience, enabling staff to apply their knowledge in real-world scenarios and gain confidence in managing proactive assurance processes.
Baker Tilly applies a structured approach to proactive assurance, beginning with assessing strategic objectives and identifying risks through collaborative engagements with management. The Baker Tilly team integrates insights from various functions, establishes control frameworks and provides continuous feedback, ensuring that assurance activities align closely with organizational goals.
Proactive assurance is becoming an essential internal audit function, evolving with AI, analytics and real-time monitoring. With these advancements, organizations will gain robust, adaptable frameworks to support growth, compliance and strategic success.
