Risk management has, for the most part, sat at the top of organisations’ - especially those in the finance sector - agendas. But this core priority has been accelerated further due to the pandemic. Organisations have or will be making operational changes as they look towards improved resilience, agility and flexibility in line with consumer and stakeholder demand. Such radical shifts inevitably need vast amounts of time, resources, administration, deliverables, and communication – all of which can be hard to quantify in terms of risk.
The Analytics in Finance and Accountancy report by ACCA found many professionals are still using rearward looking analytics, reporting on past performance to determine the future. While history can be a good telling sign of the future, it isn’t an objective measurement. Accountants are instrumental in building forecasts and identifying patterns. So, as advisors to the world’s businesses, they must earn trust and credibility and make accurate recommendations to their clients on upcoming threats or opportunities.
Indeed, the pandemic revealed companies’ three common areas of weakness: governance and risk oversight, business resilience and cyber risk management. Those that are aiming to be better prepared for what the future holds will need to rethink their risk management strategies, and leaders are being put under more pressure to back up their predictions with data. With the rise of computer technology, analytics, data and artificial intelligence (AI), it’s no wonder risk analytics has made its way into the corporate world. Using enhanced technology, risk analytics makes it easier to measure, predict and report levels of risk and crisis, with more accuracy than ever before.
Real time reporting
Traditional ways of reporting data and analytics in the Accountancy sector have relied on month-to-month ‘record to report’ data. This means that many Accountants are unable to view errors or react to short-term trends until long after they may have happened.
Real-time access, something which most data providers will now give those within the sector access to, takes away the risk of missing out on crucial information from your business or clients which may present as troublesome if not dealt with quickly and efficiently.
Clearer pictures with data visualisation
Accountancy is very much a numbers game, to have an analytical mind is key to career success within the sector. However, the way we learn or absorb information isn’t something that we choose, it is something that is genetically predisposed. With over half of the population being visual learners, it is slightly baffling that so many companies continue to rely on data-filled spreadsheets to get their message across.
By transforming hard data into digestible graphs and infographics, not only are Accountants making the lives of their clients a lot easier, but they are undoubtedly minimising the chance of risk. If a client, and the Accountant, understands the data presented and can physically see areas of concern the likelihood of immediate action being taken is much higher.
Indepth, consistent audits
Where manual audits take place, especially within large firms, Accountants may use a vast number of different ways and/or tools to undertake this work which may result in inconsistencies and consequently error. Not to mention the inordinate amount of time it takes for manual audits to be completed.
By using computer programmes, large amounts of data can be processed at one enabling Accountants larger sample sizes - up to 100 per cent - to be tested improving the overall procedure and minimising the chance of sampling risk.
Beware of the limitations
Of course, much like anything, data tools and technologies cannot be solely relied upon – the expertise and experience of people is crucial in the maintenance of high standards of work.
Computers cannot understand the need to safely and securely retain consumer information in line with GDPR, extraction of specific data relevant to one client cannot be highlighted by a machine nor can it truly understand what the data it collects means and its significance.
Where Accountants get on board with these tools while understanding and being aware of the barriers of the technologies, business operations and transformation projects will see significant improvement and, perhaps most importantly, they will be able reshape the way they can predict and prevent risks for their clients and organisation.