By Andrew Harding
For businesses today, risk planning goes far beyond common operational, compliance, or fraud risks. The risks businesses face today are nuanced and evolving — and have been strongly influenced by the years-long pandemic, the war in Ukraine, and other global factors.
In these changing and complex times, finance leaders must be nimble and proactive. They need to be prepared for these new risks and their potential impact to every level of their business.
Being proactive starts by addressing four business risks now to ensure businesses thrive in a time of accelerated change.
Develop a workplace culture built on empathy
Employees want to feel valued and utilised and they want their voices heard.
A workplace culture built around collaboration, trust, and empathy will address these employee concerns and help with overall employee retention and morale. Improved communication between staff and leadership can help bolster employee engagement and productivity.
A leader who actively listens to their staff members is practising empathy and learning more about what each member of their team values. Listening to team members helps develop strong bonds, and that promotes morale, workplace culture, and effective collaboration.
If your team is remote, building these bonds of trust is even more crucial.
Boost cyber resiliency
When news of big-time cyberattacks hits, it can be easy to look at these examples and think, “This could never happen to my company.”
But we shouldn’t be complacent. While very large companies experience fraud or extortion, smaller-scale cyberattacks like phishing, malware, spamming, and so many more are very real, everyday threats, which can still cause a lot of damage.
In 2021, an average of 270 attacks per company occurred — a 31% increase over 2020 — according to Accenture. Cyberattacks are a real risk and the need for cyber resilience grows stronger each day.
Inflation rates are on the rise, hitting countries unevenly, and will likely only get more severe. This will undoubtedly affect businesses, and finance teams will need to be nimble in this higher-inflationary environment.
To operate in these circumstances, finance teams need to plan diligently. During strategy planning, ask yourself these key questions:
- Have different geopolitical risk scenarios been developed for our business?
- Have different inflation scenarios been modelled?
- Have mitigations been established that enable our business to keep generating a healthy cash flow?
The rising costs will affect your customers. New customer habits will need to be calculated within your business and operational models.
Your staff will likely be feeling the burn of inflation, too, and may require additional help and support. This does not necessarily mean wage increases, but they may need supplementary considerations to help them navigate these changing economic environments.
Meeting your staff where they are and seeing their struggles in this inflationary environment relate back to the importance of empathy in the workplace.
Fortify your supply chains
The pandemic rocked global supply chains and forced all levels of business to consider how they manufacture, purchase, and supply goods.
Should any global event of this magnitude happen again, businesses need to be ready and nimble. Take precautions now to strengthen your own supply chains. Adaptation is critical.
To create a more resilient personal supply chain, you can:
- Educate yourself. A commitment to growth, learning, and unlearning will enable your company to expand in the future. This is a developmental process that won’t happen overnight, but will help you, your team, and your organisation thrive.
- Prepare for the digital age. Now is the time to prioritise tech developments and schedule any necessary trainings.
- Build new reporting processes. Business leaders need relevant information to help them make informed decisions. It will be the role of the management accountant to report both financial and non-financial data to drive decision-making and mitigate risks.
- Shake things up. Now is the time to be the disruptor and reinvent how you do business. When finance leaders embrace a growth mindset — one built around resilience, education, and innovation — and frequently question existing ways of working, they can better influence strategic direction.
In this environment of accelerated change, business leaders must be proactive to ensure their future. They’ll be leaning on the guidance and expertise of accounting and finance professionals to address these new risks and develop new mitigation practices.
As an accounting and finance professional, you have what it takes to bolster the resiliency of individuals, businesses, and economies.
Andrew Harding, FCMA, CGMA is the Chief Executive — Management Accounting at the Association of International Certified Professional Accountants, representing AICPA & CIMA