Ralph Daals, group chief auditor of London-based RSA Insurance, is passionate about the journey he and his team have been on over the past two years. "The seeds for the transformation were sown in October 2013 when internal audit uncovered significant irregularities during a routine review in our Irish business," he explains. "That event was publicly reported and brought home the message that, in the end, internal audit will be judged by the things it misses."
This clarity about internal audit's accountability led to new, forward-looking expectations of the function. Daals recalls: "Our chairman put it nicely--'I would like you to be able to tell me that the building is about to catch fire, as opposed to pointing me to it after the event.'"
Meanwhile, RSA was transforming with an agenda of significant strategic rationalization, cost reduction, and operational turnaround. The company was changing rapidly with innovations around big data, robotics, and more digital and agile developments; and with these changes a new profile of risks emerged. "Typically, internal audit follows the company," Daals says, "but we were driven to make a huge leap to get ahead and stay ahead."
The challenges were tough. "We not only had to become more dynamic and forward-looking, and get on top of the new risks RSA was facing, but we also had to play our part from a cost and efficiency point of view. We had to do more with less--we're talking about a double-digit percentage cost reduction here," he says. "Doing this right meant reinventing ourselves and fundamentally changing our mindset, skills, and ways of working."
TRANSFORMING INTERNAL AUDIT
The ambitious changes Daals sought required the function to be inventive--particularly because, he emphasizes, it did not have deep pockets and could not hire expensive consultants. "Constraint was a key driver of innovation and, ultimately, became a real friend," he says.
The team started to assess the world around it, identifying and learning from cutting-edge companies regardless of industry and function. "We ended up casting the net pretty wide and then adopting and tailoring what we thought could work well for us," Daals says. "Jim Collins' book Good to Great provided a lot of early inspiration. It was all about starting with purpose and people--attracting and retaining the right talent, giving them freedom within a framework, and playing to their strengths."
He was wary that, in too many cases, change programs introduced new processes that existed on paper, but didn't lead to new ways of working in the long term. Theirs was not, he argues, a traditional transformation program--it had no project plans, no champions, and no reams of documentation.
"We looked to make change easy and infectious, with small iterative improvements...