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Report looks at the role of accountants in effective enterprise risk management

Professional accountants have a meaningful opportunity to enable more effective enterprise risk management within the organizations that they work for, according to a report published by IFAC (the International Federation of Accountants).

The report underscores the reality that risk management remains underdeveloped in many organizations. A survey of mainly US-based organizations, conducted by North Carolina State University and the American Institute of CPAs, found that less than 20 percent of organizations view their risk process as being integrated with strategy and objectives, and 69 percent of organizations do not have a comprehensive enterprise risk management process in place.

To drive more effective ERM, management must draw upon the chief financial officer, accountants and finance function to ensure risk management practices provide a holistic understanding of opportunity and risk linked to objectives and value creation.

CFOs and accountants with clear risk management responsibilities are in a better position to make individually and functionally greater contributions to risk management. The report identifies three ways in which CFOs and finance functions can enhance their contribution to ERM:

  • Align risk management with value creation and preservation;
  • Drive insights and enable decisions through provision of risk modeling and analytics, data governance and identification of organizational risk appetite; and
  • Enable integration and interconnectivity by breaking down siloes across the organization to share information.

Enabling effective ERM will require accountants to employ various competencies, including strong leadership and interpersonal skills, and to commit to lifelong learning on risk management and emerging risk issues. In the coming decades, it will be critical to better integrate risk management into professional education and training for accountants, and to improve the relevance and quality of continuing professional development (CPD). 

Read the document (PDF).

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