Management accountants are creating value out of uncertainty
The evolution of the management accountant from bean counter to business partner has been well-publicized. Accountants and finance professionals have become accustomed to the greater role management accountants have assumed within their organizations as they have led in formulating strategy, anticipating risk and determining the best course of action to move forward.
Their responsibilities have grown both in volume and in importance, but perhaps there is no better encapsulation of the value management accountants provide to their organizations than their role in enterprise risk management. During these uncertain times, having an effective and impactful ERM plan is as important as it has ever been.
As the Institute of Management Accountants celebrates International Management Accounting Day and we look toward the ways in which management accountants contribute to the organizations, their value has increased as a result of the current turbulent and uncertain business environment.
The instability brought by the COVID-19 pandemic makes up only a sliver of its total impact, though it has brought into focus the significance of businesses having a sound risk management system in place. Organizations need to be ready to deploy their ERM plan at any moment. The more understanding there is around the plan, the better it will be in both the short term and long term.
During the COVID-19 crisis, management accountants have stepped up to allow for business processes to continue and ensure the well-being of employees, thanks to their ERM knowledge and roles as leaders in their organizations. Management accountants’ evolution as leaders who are ready to plan and execute strategies has prepared them perfectly to guide businesses through these turbulent times.
For management accountants with certifications, they approach their roles with competencies in driving strategy planning processes, acting as cross-functional business partners and demonstrating ethical and legal compliance, skills that allow them to effectively lead risk management operations.
Amid the COVID-19 crisis, businesses face an ever-growing collection of threats that, if not appropriately acted upon, can irreparably damage the financial outlook of a given company and lead to job losses as a result. Numerous cybersecurity challenges have emerged as thousands of companies have undergone a sudden shift to remote work. Breaks in the supply chain have also become a concern, with many businesses nationally and around the world shutting down due to the pandemic, which has impacted daily operations and the ability to continue functioning.
With their knowledge of ERM, management accountants have been tasked with accounting for these risks and employing sound strategies to mitigate the impact on business continuity and employee well-being. Guiding management accountants through the ERM process is COSO’s Enterprise Risk Management – Integrated Framework, which provides a comprehensive roadmap to professionals to help them develop and implement successful ERM practices.
The COSO risk management framework considers operational and financial responsibilities, both functions performed by management accountants. Those coordinating their business’ risk management strategy will need to assess their deployment of capital as well as reduce any operational surprises that result in losses. Organizations will look to their finance professionals to ensure they are in the best position possible to withstand or manage fiscal risks.
A strong ERM framework also requires communication and coordination between all departments within an organization to ensure the company is well-positioned to manage uncertainty and create value. As the finance function now collaborates with other teams within the organization, management accountants have become strategic business partners who are highly valued throughout the risk management process.
The increased responsibilities of management accountants ensure professional benefits and guarantee that they provide value to their organizations in functions of great need, including ERM. Financially and operationally, management accountants possess the skills necessary to lead their businesses through turbulence and create value out of uncertainty.