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Tightrope | AccountingWEB | Firms urged to find opportunity in risk
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Firms urged to find opportunity in risk

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In a time of unprecedented global disruption, firms need to approach risk in a positive way, embracing the constantly changing world in order to move forwards.   

19th Jun 2024
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Accountancy firms need to “embed agility and adaptability” in their culture if they’re to keep an edge in the market, a senior figure at BDO has told AccountingWEB, after a new report found that businesses need to change the way they respond to global risks to remain competitive.

BDO’s annual Global Risk Landscape report found that leaders are facing “almost permanent disruption”, with 84% of the 500 respondents saying the global risk landscape is now “more defined by crisis than at any time in recent history”.

Regulatory risk was identified as the biggest, with 37% of respondents flagging it as a major concern against 7% last year.

Supply chain risk was second, while geopolitical tensions rose three places to joint third alongside economic slowdown.

Rounding out the top of the table are cyber risk and technological changes, with the report noting: “With risk velocity accelerating, the types of risks that businesses feel unprepared for have shifted significantly over the past 12 months.”

Gains to be made

However, while there is a natural inclination to look at risk in a negative way, the survey also found that there are “competitive gains to be made” from responding positively to challenging circumstances.

“Fortunately, companies are eager to learn; despite multiplying risks, almost half of leaders said encouraging innovation is a priority for their organisation for the next two years,” said the report. “But to do this, organisations need to take a step back and challenge entrenched assumptions and beliefs.

“By really probing ‘why do we do it this way?’, organisations can start to think differently about how they approach risk, opening up new perspectives and ideas that might have been overlooked in the past.”

Thrive on innovation

Alisa Voznaya, director of risk transformation at BDO, took a look at the findings of the study through the eyes of professional services firms, noting that they “thrive on innovation and value creation for their clients”.

“To keep an edge in the market, accountancy firms need to embed agility and adaptability in their organisational culture and how they engage with clients,” she said.

“As technology, regulation and client expectations change, accountancy practices need to lead the way in not only adapting to global risks, but also in identifying new risks and opportunities for themselves and their clients.”

Changing with the world

Voznaya stressed that “as the world around us changes, we need to change alongside it”.

“Failure to do so can lead to a number of undesirable outcomes. This includes losing the trust of clients and employees if they don’t properly gauge changing preferences and lean into those changes quickly enough, or tarnishing the firm’s reputation by failing to meaningfully respond to an evolving regulatory and legislative environment.

“In failing to understand the compounded risks and opportunities, firms could become irrelevant to their market altogether.”

Not every firm responds to change the same way – or at all – with Voznaya believing that the biggest mistake being made “is around organisational culture”.

“It’s the old adage of ‘insanity is doing the same thing over and over again but expecting different results’,” she said.

Untended blind spots

“Failing to create a culture of continuous learning, where setbacks are seen as opportunities for learning and growth rather than failures, means that only good news makes its way up to corporate leadership,” continued Voznaya. “This leaves significant risk blind spots untended.

“When a risk becomes a reality or an opportunity is seen as lost, there will be someone in the business who was aware of it but didn’t have the confidence, initiative or independence to raise the issue.

“Every business can learn from its experiences, especially its failures, by constantly evolving, adapting and turning setbacks into a source of competitive advantage.”

Opportunity in adversity

Steph Gemson, director at TaxGem, spoke to AccountingWEB about the firm’s approach to finding positives among the risks.

“There’s no doubt that small businesses have had their fair share of challenges in recent years,” she said. “But in my view, operating in the accountancy and tax sector truly is an industry in which we can find opportunity in adversity.

“We operate in an industry that people turn to for advice and guidance more than ever during times of economic hardship and volatility. We, more than any other sector, have the opportunity to guide businesses through periods of challenge and change, building strong relationships, and even stronger businesses along the way.”

Lessons learned

Gemson noted that the primary lesson TaxGem has learned in recent years is that “education and knowledge are key”.

“Due to the fast-paced nature of tax as an industry, our business does carry some inherent risks. Maintaining a level of knowledge and education above and beyond that of our competitors helps us navigate that risk, for us and for our clients.

“I’d also say that adaptability is another crucial lesson that we have learned. We have invested a substantial amount of time and money in ensuring we have a robust CRM [customer relationship management] that enables us to keep track of our clients and to get key information that may affect their business out to them, quickly.”

The risk of being left behind

Her advice to firms that perhaps don’t place as much value on being prepared for change?

“Embrace the opportunities that economic risk and challenge brings by staying educated and nimble. Or run the risk of being left behind in this fast-paced ever-changing landscape. 

“In today’s world, we need to be adaptable to change quickly. So, step one is to stay across potential changes, share knowledge with your team and network. Then be ready to implement. To get the message out to clients quickly when a change is coming that will directly impact them, or to adjust your own internal controls to de-risk.”

Replies (2)

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the sea otter
By memyself-eye
19th Jun 2024 18:48

Yawn - Guderian would be bored stupid.

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By FactChecker
20th Jun 2024 22:08

The entire article is all motherhood and apple pie.
If you delete the word 'accountancy' from every instance of the phrase "accountancy business", then no meaning (or insight) is lost.
Truisms aren't made revelatory because spouted by senior spokespeople.

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