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​Update: A Dire Picture of Climate Risk

Articles Internal Auditor Magazine Staff Aug 30, 2021

The IPCC's latest report pleads for immediate environmental action.

​The Earth will surpass the 1.5˚ C (2.7˚ F) benchmark cited by the Paris climate agreement within the next 20 or 30 years — even under the best scenarios designed to reduce greenhouse gas emissions, says the latest report from the Intergovernmental Panel on Climate Change (IPCC). According to the report, the Earth is hotter now than it has been at any point since the last Ice Age

The report details evidence that humans are the direct cause of this warming, as well as many deadly weather events such as heat waves, droughts, and flood-inducing storms. Through developments since the last report in 2013, scientists “can now attribute many more changes at the global and regional level to human influence and better project future changes we will see from different amounts of emissions,” said Ko Barrett, vice chair of the IPCC and senior adviser for climate at the U.S. National Oceanic and Atmospheric Administration, at a press conference.

Moreover, today’s advanced computer simulations and measurement technologies show that many of these changes are irreversible. The report’s conclusions are clear: The only meaningful path forward is to reduce humanity’s greenhouse-gas pollution to zero.

For businesses, the report’s findings translate to boards prioritizing meaningful discussions on climate-related risks and how their companies directly impact climate change. “Companies are clamoring to understand the risks,” said Opiant Pharmaceuticals board member Ann MacDougall during a recent Agenda webcast, “Boards and the Climate Crisis — Strengthening Oversight.”

Companies also are facing growing pressure from investors, governments, and organizations such as the United Nations to make climate disclosures more transparent, Reuters reports. — L. Wamsley

Bridging Audit’s Competency Gap

Top leaders are more confident than managers in their audit team’s abilities.

Senior leaders are more confident than lower-level managers in their internal audit team’s ability to audit digital technologies and emerging risks, says an Internal Audit Foundation and Deloitte study. The 1,181 global respondents to the Assessing Internal Audit Competency study rated their department’s competencies in areas such as business continuity, dynamic risk assessment, cybersecurity, and disruptive technologies.

Forty-four percent of vice presidents say their functions possess the skills to audit more than three such risk areas. That view is compared with 38% of chief audit executives, and 23% of managers. A perceived lack of resources and struggles to keep pace with innovation may explain the pessimism of the less-senior leader, the study suggests.

Overall, audit leaders say their teams are least equipped to audit cloud and virtual computing environments and disruptive technologies. The study complements The IIA’s Internal Audit Competency Framework, which can be used to assess skills and plan for training. 

Deloitte partner Mike Schor says internal audit functions should weigh the dual benefits of enhancing skills, which include “improving their own operations and enhancing the impact of their audit activities.” — C. Janesko

The Plight of the Midcareer Worker

Hiring managers favor younger candidates, despite equivalent performance.

Even in a hot employment market, midcareer workers are facing steep odds to land new jobs, says a study from Generation, an employment education organization based in Washington, D.C. Hiring managers surveyed prefer younger candidates to applicants ages 45 and above, notes the Meeting the World’s Midcareer Moment report. That’s even as they acknowledge that older employees’ performance is equal to or better than younger colleagues, according to the report, based on a survey of 3,800 people in seven countries.

The 1,404 hiring managers surveyed say candidates ages 35-44 (57%) and job-seekers ages 18-34 (26%) are more application-ready. That means they have well-prepared documents, good referrals, and strong interview performance. Just 17% consider older candidates application-ready. 

Moreover, hiring managers say younger candidates have more relevant education, job experience, and technical skills than older applicants, and they consider them a better fit for the organization by an almost three-to-one ratio. Conversely, they say older workers are reluctant to try new technologies, unable to learn new skills, and have difficulty working with different generations.

In an unprecedented labor market created by the pandemic, employers cannot just hire younger, new candidates, says Generation CEO Mona Mourshed (see “Overcoming Hiring Bias” below). “Employers also must commit to reskilling existing employees and to hiring midcareer workers who want to switch careers,” she says.

Relevant training can be especially helpful for landing a good job, the report points out. Training and professional certification are highly valued by hiring managers, yet most respondents ages 45 and above say they aren’t excited about pursuing training. — T. McCollum


Little Relief for Semiconductor Shortage

Companies are feeling the impact of the worldwide chip shortage. 

In a year of supply chain disruptions, virtually all industries have felt the effects of the global semiconductor shortage. The auto industry has been hardest hit, with General Motors announcing in September that it was temporarily shutting down most production at its North American plants because of the shortage. 

BMW, Ford, and Volkswagen also have cut their production estimates. Consulting firm Alix Partners forecasts that automakers will lose as much as $110 billion in revenue in 2021, due to the shortage. 

Several chip manufacturers are accelerating plans to increase production and diversify their supply chains. Intel and Taiwan Semiconductor Manufacturing Co. have both announced plans for expansions in the U.S., while Bosch recently built a $1.2 billion semiconductor plant in Dresden, Germany. 

The European Union, South Korea, and the U.S. all have massive spending plans to boost chip production. But it is unclear how long it will take such efforts to have an impact, Alan Priestley, vice president at Gartner, told ZDNet. “It will take many years to follow through,” he said. — L. Wamsley

​Overcoming Hiring Bias

Training is crucial for midcareer candidates searching for jobs in a multigenerational workforce, says Generation CEO Mona Mourshed.

How should internal auditors assess whether there is age bias in their hiring practices, and what can midcareer auditors do to better compete with younger applicants? Biases persist because they are insidious, and it takes deliberate action over years to reverse them. Look at the data. How age diverse is the organization? What is the job performance of different age brackets? If bias is found, adjust your approach. Replacing résumé-focused hiring processes with those that focus on demonstration-based exercises provides an opportunity for candidates to demonstrate their skills, irrespective of their age. And plan for the long term and look for ways to nurture generational diversity within and across teams once you have candidates in a role.

Profession-specific training is key. In our survey, we found that three out of four midcareer workers who had successfully switched careers credited training as being instrumental to their success. Find opportunities to gain new skills or improve your current skills. And look for employers who are committed to an intergenerational workforce.

Why do hiring managers prefer younger job candidates, even when older workers have had comparable job performance? There are a few possible explanations. The largest group of hiring managers we spoke with fall in the age bracket of 35-44, and perhaps "like attracts like" — they see their age counterparts as more competent because they see themselves in them. Another explanation is belief perseverance, which is the way in which general bias persists in spite of evidence to the contrary. In either case, there is a real opportunity to shine light on this disconnect and adjust the way hiring managers think about this group of midcareer job candidates.

Internal Auditor Magazine Staff