Accountants urged to adopt risk management role
CFOs must seize the opportunity to drive effective enterprise risk management according to a study by the International Federation of Accountants (IFAC), which warns many organisations are failing to embrace comprehensive ways of managing risks
9 Jan 2019
IFAC says businesses face rapid change and increasing uncertainty driven by a myriad of factors, including geopolitical events, volatile financial markets, technology developments, cybersecurity, data privacy concerns, and climate change.
Its report highlights research showing that risk management remains underdeveloped in many companies. A survey of around 500 mainly US-based organisations, conducted by North Carolina State University and the American Institute of CPAs, found that less than 20% view their risk process as being integrated with strategy and objectives, and 69% of organisations do not have a comprehensive enterprise risk management process in place.
Kevin Dancey, IFAC CEO, said: ‘This is a particularly uncertain time for businesses as the global economy experiences heightened volatility and rapid change. In this environment, proper risk management will be increasingly important for organisations to ensure their resiliency and success over the long term.
‘Professional accountants are well positioned to better serve the organisations they work for by enabling effective enterprise risk management that identifies both risks and opportunities for the business.’
The report identifies three ways in which CFOs and finance functions can enhance their contribution to enterprise risk management. These are to align risk management with value creation and preservation; drive insights and enable decisions through provision of risk modelling and analytics, data governance and identification of organizational risk appetite; and to enable integration and interconnectivity by breaking down siloes across the organisation to share information.
IFAC says enabling effective enterprise risk management will require accountants to employ various competencies, including strong leadership and interpersonal skills, and to commit to lifelong learning on risk management and emerging risk issues.
It believes that in the coming decades it will be critical to better integrate risk management into professional education and training for accountants and to improve the relevance and quality of CPD.
Report by Pat Sweet