Accountants are pivotal in identifying and managing non-financial risk
Risks are becoming increasingly global, interconnected and multi-tiered but non-financial risk management is currently underdeveloped.
In Brief
- Non-financial risks have always existed, but the way we conceive risks has broadened substantially
- The challenge for organisations is really understanding how to address non-financial risks
- Chartered Accountants ANZ has released a guide to non-financial risks
"The COVID-19 pandemic has shown us the extreme consequences of non-financial risks on businesses, entire industries and global economies. No one could have predicted the scale of the ramifications but if we can learn any lesson it's that we need to take non-financial risks seriously." Karen McWilliams, Chartered Accountants ANZ Business Reform Leader.
Non-financial risks have always existed
Although many non-financial risks have existed for some time, it's only relatively recently that the way we conceive risk has broadened beyond traditional risks (such as credit risk, competition and market factors) to include operational risks, conduct risks, compliance risks and cyber risks, as well as environmental, social and governance (ESG) factors. Organisations need a holistic approach to risk management, taking into account the interconnected, multi-tiered nature of risks, and the way the relationships between risks change at speed.
"Chartered Accountants need to understand the wider business environment and consider risks from a broader perspective."
Read the report now: Guide to Non-financial risks
The Accountants' Role
Accountants have a pivotal role to play in identifying and managing non-financial risk, as well as maximising the opportunities that emerge from non-financial risks, particularly given "risk management is not about eliminating all risks, it is about identifying and responding to risks in a way that creates value for a company and its shareholders." ASX Markets Supervision Education and Research Program.
The challenge for organisations is in understanding how to address non-financial risks and what they mean for the organisation and business. Chartered Accountants can provide insights and advice on how to consider these aspects in an organisations strategy and apply it to reporting and disclosures.
Chartered Accountants ANZ has put together the strategy – a roadmap to a possible future. The roadmap breaks down business strategy into four key principles and elements that CAs can consider when working in or with businesses.
CA ANZ Guide to non-financial risks
To help members navigate this non-financial risk landscape, Chartered Accountants ANZ has produced a guide to non-financial risks in 2020 (the guide). The guide provides members with a starting point to understanding and addressing non-financial risks. In particular, the guide covers the five broad areas of governance, strategy and risk management, disclosure and reporting and assurance, drawing on domestic and international information from organisations such as The World Economic Forum (WEF), Australian Securities and Investment Commission (ASIC), and NZ Financial Market Authority (FMA).
Guide to Non-financial risks
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