12 November 2002
Steve Marshall, former CEO Railtrack, Kevin Hayes, MD and CFO of Lehman Brothers and Steve Harvey, Director of People, Profit and Culture at Microsoft are among the leading business figures to offer their candid personal insights in Managing Risk to Enhance Stakeholder Value, published jointly with CIMA and IFAC’s Financial and Management Accounting Committee (FMAC).
CFOs and chief risk officers are now responsible for moving the agenda away from avoiding risk to managing it so that the process drives performance and creates shareholder value. Managed properly, risks are described here as opportunities to be grasped as much as hazards and are essential for achieving and maintaining competitive advantage.
Speaking at the CIMA risk conference which saw the launch of one of two major risk management publications from CIMA this month, Charles Tilley, Chief Executive, said:
"Fundamental to any risk management strategy is the quality of management information available. Internally, executive staff need to have the right information to confidently identify potential risks that could generate or destroy value. Externally shareholders increasingly require information on risks, whether strategic, environmental or reputational. If relevant comprehensive and clear information is available throughout the business, boards will be freed up to concentrate on strategy and delivering value to shareholders."
Striking a rich vein of best practice in this important and emerging area, leading accountancy journalist Robert Bruce has canvassed the views of business leaders whose contemporary view of risk management involves treating risk in the context of business strategy. This publication focuses on the theme of risk management from both the traditional view of the financial risks of a company and the emerging application of risk management techniques in the areas of strategy, reputation and people.
As Bill Connell FCMA, Director of Risk Management at BOC and Chairman, FMAC says:
"Corporate governance has made risk management very topical, but you cannot go through the risk management process for those reasons. You have to do it because it helps the business. If you go through the process of risk management for corporate governance reasons you simply end up with bureaucracy"
This theme is continued in the article on managing business interruption. Kevin Hayes, MD and CFO Lehman Brothers describes how they managed after the events of September 11:
"Historically, business continuity planning was about data recovery. Today, it is recognised that there is a need to integrate it into everyday business processes so that critical elements of the business continue working in all circumstances."
Other themes that emerge are the importance of employees and the change in culture in organisations.
"Staff are the most powerful ambassadors you can have. If honest and positive views are being expressed rather than pessimistic tones of a workforce whose morale has gone, it can make a huge difference. It does have a powerful effect."
Professional accountants in business must take a multi-dimensional view of their business and discuss risk management in the context of the strategic planning process in their company.
As Stathis Gould, Head of Technical Issues at CIMA says when looking at motivation for better disclosure in the future:
"As we are seeing with corporate social responsibility reporting, leading companies will want to distinguish themselves from the rest of the pack. For these companies, the goal will be for a seamless interface between management accounting, external reporting and investor needs".
CIMA will also be publishing Risk Management: A Guide to Good Practice later this month which is a practical introduction to risk management and provides guidance on establishing a robust risk management framework in any type of organisation. It has been written with finance and line managers in mind who desire risk to become an everyday part of their management process. A case study of risk management in action, an example risk map, risk management policy and risk analysis of a telecommunications company are just a few examples of this guide aimed to help organisations, whether large or small, to quickly implement a risk management process that can improve corporate performance.
To obtain a hard copy of Managing Risk to Enhance Stakeholder Value contact publishing.sales@cimaglobal.com, visit http://www.cimapublishing.com/ or telephone +44 (0)20 8849 2229/2277/2270.
Risk Management: A Guide to Good Practice will be available from CIMA Publishing from the end of November, price £17.95. Please see above for contact details.
If you would like more information please contact Lottie Muir
Phone: +44 (0)20 8849 2407
Email: lottie.muir@cimaglobal.com
Fax: +44 (0)20 8849 2471
