Accountants describe themselves as finance professionals and we would feel aggrieved and affronted by any suggestion that in doing our jobs we were anything else.
But what is the essence of a professional that sets him or her apart? If any single factor can be identified, surely it must be the capacity and the duty, if necessary, to act in accordance with our professional conscience even when we know our advice may not be popular. We must retain our professional integrity in business life. We must be prepared to tell the CEO and management when we believe their strategy may be flawed. Ultimately, we must, if necessary, be prepared to hear the words, 'you're fired'. Quite simply, this is a risk any professional must be prepared to accept. It goes with the territory.
 The public have a perfectly reasonable expectation that we will act in the public interest regardless of possible risks to our own positions and that we will protect the integrity of those businesses on whose health we all rely in the international community.
The role of the finance professional has broadened far beyond mere numbers and in the wake of the most serious global banking crisis since World War 2, it should be finance professionals who are prepared to stand up and be counted in influencing executive management and alerting them to the potential impact of corporate risks whether these are strategic, operational or hazardous which may be caused or influenced by the external environment.
And we have the professional skills and tools to do this. We can, and must, create and manage enterprise risk management frameworks which are effective in giving the whole picture of a company's financial and risk management strategy, and which can be understood by the management, shareholders, analysts and the wider business community.
If in our businesses, we deal in complex financial instruments, these must be fully understood and ultimately distilled into key performance indicators in our companies' strategic and operational plans. It is not good enough to go with the flow when times are good in the hope that risk management can be put off until tomorrow. Equally, finance professionals should be in a position to highlight the opportunities when companies can benefit from taking risks. In business life, risk is a necessary concomitant of success. But it is, as in all things, a question of balance.
Risk management is becoming a core competency of finance professionals with the CEO expected to plot and show the relationship between the risks and the company's financial reporting and provide an effective framework for good governance and risk management.
Today's CEO must provide a complete risk management strategy encompassing financial, strategic, compliance related, operational, and environmental risks. Utilising a system of multiple levers of control, internal controls, strategic controls and feedback controls, the CEO must insist that risk management is everyone's responsibility and not simply that of specialists.
So it is extremely disquieting to read reports suggesting that the lessons of the banking crisis have not been learned. Just over one year after Lehman Brothers collapsed on September 15 2008, world leaders at the recent G20 Summit in Pittsburgh, USA, have vowed to put in place measures for reform but have acknowledged that there has been a 'back to business as usual', attitude within the banking community.
US President, Barack Obama, has warned of complacency, saying, 'we will not go back to the days of reckless behaviour and unchecked excess at the heart of this crisis'.
Finance professionals must be at the heart of the drive for the highest standards in corporate governance and risk management, and the global professional bodies of which they are members must ensure that the professional qualifications they administer drive the ethical and technical standards necessary to maintain public confidence.
In spite of recent exposure to the sub-prime induced credit crunch, it has been suggested that Australia and the Asia Pacific region may currently have an advantage over many countries, having learned from bitter experience in the 1990s. As a result, it can be argued that Australia and the region generally are perhaps better placed to weather the storm than they otherwise might be.
This may be so, but it does not alter the fact that the global community looks to its finance professionals to accept their responsibilities in organizational risk management and corporate governance. Finance professionals have the skills and the financial tools to do the job. We must continue to do it professionally, whatever the personal risks.
Aubrey Joachim lives in Sydney, Australia, and is the Global President of the Chartered Institute of Management Accountants.
To share your views and join in the debate on the role of the finance professional in organisational risk management, see Aubrey Joachim's blog on www.cimaglobal.com/sphere. |
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