- COVID-19 has pushed risk management to the top of an accountant’s priority list and underscored the need for the accounting profession to play a central role in preparing for potential disruption, U.K.-based Association of Chartered Certified Accountants said in a report.
“The global pandemic has catapulted risk management to center stage,” ACCA Chief Executive Helen Brand said, adding “disruption preparedness is now top of organization's priorities.”
Amid the pandemic, 29% of ACCA members in Western Europe identified defaults, bankruptcies, consolidation and other industry disruptions as the biggest risk to their organizations, according to a poll by ACCA in March.
The pandemic plunged businesses into a downturn more sudden and severe than previous crises, with global output falling about three times more than during the 2007-2008 financial crisis, according to the International Monetary Fund.
The global economy shrank 3.3% last year and will probably grow 6% this year and 4.4% in 2022, the IMF said. Still, world output in 2024 will probably be 3% lower than forecast before the pandemic.
The harm from COVID-19 has made accountants “re-address risk and manage increasing uncertainty and faster shifting in this new digital era,” according to the ACCA. “Accountants have been presented with an unmissable opportunity to reassess how they can add more value.”
For example, accountants should consider providing deeper scenario analysis and sharpening predictive analytics to create more forward-looking insights for their companies, the ACCA said.
ACCA members in Western Europe identified several risks to company performance beyond industry disruption. Twenty-two percent said regulatory change was the top risk, while 19% said tariffs, supply chain strains, geopolitical tensions and other disruptions to global trade are the biggest potential hazards, according to ACCA.
"What's clear from the roundtables we held with ACCA members is the need for accountants to truly understand the strategic and business risks that their organizations face in the short, medium and long term," according to Rachael Johnson, head of risk management and corporate governance at ACCA. "In this way, they can help maintain operational resilience in today's fast-changing, interconnected environment."
Accountants shouldn’t underestimate the risks posed by high carbon emissions, Brand said.
“While COVID-19 is the biggest crisis in a generation, we all face huge risks from rapid climate change,” she said. “Failing to address sustainability is the biggest risk of all.”
Accountants “can help companies attain more sustainable outcomes for long-term success by integrating environmental, social and governance (ESG) matters into their decision-making and assessing ESG impacts on the financial, industrial, agricultural and ecological systems on which they depend,” the ACCA said.