Assessing the Role of Risk Assessment in Planning High-Quality External Audits in Multinational Corporations

Posted: May 10, 2023

• Rowan Hayes
• Maggie Griffin
• Zara Torres

Abstract

The globalization of business operations has introduced unprecedented complexity to external audit processes, particularly in multinational corporations where regulatory frameworks, cultural contexts, and operational risks vary significantly across jurisdictions. Traditional risk assessment methodologies in auditing have primarily relied on sequential, linear approaches that often fail to capture the interconnected and dynamic nature of risks in global business environments. This research addresses the critical gap in current audit practices by developing and testing a novel Quantum Risk Entanglement Framework (QREF) that fundamentally reimagines how auditors conceptualize and evaluate risk in multinational contexts. External audits serve as crucial mechanisms for ensuring financial transparency and regulatory compliance across international operations. However, the increasing complexity of global supply chains, digital transformation initiatives, and evolving regulatory landscapes has exposed limitations in conventional risk assessment approaches. Current methodologies typically treat risks as discrete, independent variables, overlooking the quantum-like nature of modern business risks where multiple risk states can coexist and interact simultaneously.