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The accountants’ role in risk management
The International Federation of Accountants (IFAC) has published an interesting and useful piece, Enabling the Accountant’s Role in Effective Enterprise Risk Management. My thanks go to Tim Leech for pointing it out.
The paper makes a number of good points, but I think it misses a major and highly critical one.
Looking at the good first:
- Enterprise risk management (ERM) needs to be part of the professional accountant mindset and makeup.
- To add value, accountants need to be seen as risk experts who are outward-looking and provide valuable insights to manage risk in a way that supports their organizations in responding to uncertainty and achieving their objectives.
- Business requires taking risks and seizing opportunities to achieve success. The accountant’s primary role in ERM is not solely to mitigate risk, but to promote and facilitate effective risk and opportunity management in support of value creation and preservation over time. This involves being focused on the benefits of intelligent risk-taking in addition to the need to mitigate and control risk. ERM requires information and analysis that may indicate success or failure, and support decisions around potential courses of action.