The Expanding Role of the Audit Committee

The Audit Committee’s Expanding Role: Risk, Cybersecurity, and Compliance in Life Sciences Governance

In today’s life sciences sector—where regulatory scrutiny is high, innovation moves fast, and data is everything—the role of the audit committee is undergoing a fundamental shift. Once focused almost exclusively on financial reporting and internal controls, audit committees are now squarely in the middle of broader enterprise risk management. This evolution reflects the growing complexity and risk exposure facing boards across the life sciences value chain—from pre-commercial biotech to global pharma. This post explores how audit committees can stay ahead of the curve by proactively overseeing cybersecurity, regulatory risk, and emerging technologies like AI.

The Expanding Scope of Audit Committees in Life Sciences

Audit committees have traditionally overseen financial statements, audits, and internal controls. But for life sciences companies, where risk is rarely siloed, the audit committee often becomes the default forum for managing non-financial risks as well—particularly those related to regulatory compliance, clinical trial integrity, supply chain disruptions, and reputational threats.

Boards are recognizing that audit committees must engage more deeply with these issues, not only to satisfy investors and regulators, but to ensure long-term resilience and trust.

Cybersecurity: A Governance Imperative

Cybersecurity risk has become a central concern for audit committees—especially in the life sciences sector, which deals with highly sensitive and proprietary data. Clinical trial data, trade secrets, patient records, and regulatory submissions are frequent targets for cyber threats, including ransomware and nation-state attacks.

Audit committees should:

• Receive regular updates from IT leadership and/or the CISO on cyber posture, threat assessments, and response protocols.
• Review third-party cybersecurity audits or risk assessments annually.
• Ensure the company has an incident response plan—and that it’s tested.
• Ask whether cybersecurity risk is fully integrated into the company’s enterprise risk management framework.

Cybersecurity can no longer be treated as strictly an IT issue—it’s a governance issue that should be part of the audit committee’s core agenda.

Regulatory and Compliance Oversight: More Critical Than Ever

In life sciences, regulatory compliance is not a side issue—it’s central to value creation. Companies face exposure across a wide range of areas: FDA inspections, clinical trial monitoring, GxP compliance, adverse event reporting, manufacturing quality systems, and promotional practices, to name just a few.

The audit committee plays a critical role in overseeing internal controls related to:

• Clinical and commercial compliance programs.
• Quality management systems.
• Investigation and whistleblower procedures.
• Reporting mechanisms for suspected misconduct or fraud.

As companies transition from R&D to commercialization, the committee’s oversight should evolve accordingly—especially in relation to promotional compliance, medical affairs, and interactions with payors and providers.

AI, Data Integrity, and the New Frontier of Risk

AI is increasingly used across the life sciences ecosystem—from drug discovery and diagnostics to commercial operations and digital therapeutics. While AI promises transformational gains, it also introduces novel risks around data integrity, algorithmic bias, patient safety, and regulatory misalignment.

Audit committees should engage with management to ensure:

• Responsible use and validation of AI technologies.
• Appropriate documentation for regulatory and legal defensibility.
• Cross-functional governance across IT, R&D, legal, and compliance.

For companies deploying AI in regulated settings, these questions are no longer theoretical—they are now governance priorities.

Best Practices for Life Sciences Audit Committees

To meet their expanding responsibilities, audit committees should consider the following practices:

• Periodic Deep Dives: Schedule focused sessions on high-risk areas (e.g., cybersecurity, FDA compliance, third-party risk).
• Skills and Expertise: Ensure the committee has access to members or advisors with backgrounds in life sciences regulation, digital risk, or compliance.
• Internal Audit Alignment: Confirm that internal audit’s scope includes operational and compliance risks—not just financial controls.
• Clear Reporting Lines: Maintain strong lines of communication between the audit committee, compliance, internal audit, and senior management.

Conclusion

As the governance landscape continues to evolve, audit committees in the life sciences sector are being asked to do more—and rightly so. Cybersecurity threats, regulatory complexity, and technological disruption require a more agile, informed, and engaged audit committee. By embracing this expanded mandate, boards can better protect enterprise value, foster innovation responsibly, and reinforce public trust in their organizations.

At GC Legal Advisors, we have the expertise and experience to help boards and executive teams navigate these challenging issues, so let us know if we can be of assistance.