C-suite and other executives see artificial intelligence (AI) — which includes generative AI and machine learning — as the emerging technology that poses both the top risk (44.7%) and the top opportunity (35.9%) for their organizations' internal controls environments in the year ahead, according to a recent Deloitte poll. Yet, despite rapid advancements in organizations' corporate use, only 36.4% of polled executives say that their organizations update internal controls more frequently than annually.

"As emerging technologies like generative AI accelerate, organizational internal controls need to keep pace and evolve accordingly – often through more frequent updates that involve more cross-functional teams to help ensure risk management programs are appropriately robust," said Charmaine Wilson, a Deloitte Risk & Financial Advisory principal focused on controls innovation, Deloitte & Touche LLP. "Risk management, internal audit and assurance leaders should team closely with IT leaders to continuously hone their internal controls to demonstrate to management, the board and other key stakeholders that emerging risks are being anticipated and monitored."

Over half of executives say their organizations do not have a dedicated chief controls officer in-place to help manage internal controls risks (59.5%). That said, 7.5% of that group say their organizations plan to hire a controls leader inside the next 12 months.

"As AI use advances and regulations for its use proliferate, there's a pressing need for many organizations to appoint a leader who can apply an internal controls lens to help ensure that risk management approaches can scale over time as well as during strategic initiatives like M&A activity, new IT system implementations and other business-transforming efforts," said Casey Kacirek, a Deloitte Risk & Financial Advisory managing director focused on trustworthy AI use in internal controls, Deloitte & Touche LLP. "Appointing a leader to oversee internal controls for emerging tech use can help streamline taxonomies for technology management, minimize duplicate spending, allocate resources properly, maximize tech investment returns and ultimately demonstrate longer-term organizational commitment to areas including trustworthy use of AI."

Looking beyond emerging technologies' impacts on internal controls, respondents also noted a number of challenges to their organizations' internal controls during transformations. Top transformation-driven internal controls challenges that respondents noted include a shortage of appropriately skilled staff to effectively implement internal controls in line with transformation objectives (22.2%), inconsistent or absent reviews of internal controls alongside transformation efforts (23.1%), and inability to effectively leverage transformation efforts to modernize and automate internal controls (24%).