Providing support to an organisation's finance team is a must in intensifying the focus on risk management.
In the Association of Chartered Certified Accountants' Rethinking Public Financial Management report, 73.4% of respondents believed risks to their organisations would increase in the future. This demonstrates that in some organisations there is considerable work to be done to fulfil the potential of finance professionals in the risk management process.
As a call to action to such a need, the ACCA identified the following steps to provide support to the financial team:
1. Build an effective risk culture and alignment to organisational objectives
- Understand what risk means to your organisation.
- Bring clarity and communicate organisation objectives.
- Ensure processes are put in place to build a more effective risk culture.
- Governance arrangements should ensure that decision makers are engaged in thinking about and discussing risk frequently, setting a clear ‘tone from the top’.
2. Understand your organisation risk appetite
- Senior leadership across the organisation is responsible for articulating its risk appetite.
- Risk appetite needs to be communicated internally and externally.
- Finance teams need to ensure they are aware of the organisation’s risk appetite.
3. Understand the risk universe and start to prioritise risks
- Identify and categorise key risks aligned to organisational objectives.
- Build horizon scanning into key planning processes.
- Ensure finance teams build strategic and non-financial risks into their planning activities.
4. Deploy appropriate risk management tools and techniques
- Clearly record how risks can be mitigated on a regular basis.
- Encourage / facilitate senior leadership teams to undertake ‘deep dive’ reviews on key risks, using audit and risk committees as appropriate.
- Create opportunities for finance teams to better understand non-financial risks across the organisation and their impact.
5. Upskill the finance team to build organisation resilience
- Leverage the skills of finance teams in areas such as stress testing and risk analytics to better assess the impact of different risks.
- Invest in technology for staff and back-office systems to improve the effectiveness of risk management activities.
- Prioritise better data governance and control over information relating to risks.
