Board composition and diversity of thought are important ingredients for managing risks effectively, advocates ACCA and IOD India
Mumbai: ACCA (the Association of Chartered Certified Accountants), the global professional body for professional accountants, along with the Institute of Directors (IOD), India, an apex association of Corporate Directors in India, have jointly launched a report, titled ‘Rethinking Risk for the Future – An India Perspective’. The research for this report reveals views from a range of Board members, risk leaders, including ACCA members working as risk professionals across the globe and in India whether it is the governance, risk and compliance (GRC) perspective or those of finance and internal audit domains. Through these voices, we get a fresh understanding of how risk management is evolving with the practice and principles of accountancy and what ways an accountancy background can shift the mind-sets and behaviours needed to address the existential risks our organisations are facing today.
ACCA and IOD India believe there is an unmissable opportunity for both company directors and accountants in India to encourage more collaboration and collective action on ESG matters by working with public policymakers and partnering with leaders to help grasp how digitalisation and new technologies can help avoid harm to people and the planet.
On the release of the report, IOD, India President, Lt. Gen. J. S. Ahluwalia said, “Risk oversight by boards and management have been catapulted from the wings to centre-stage, on account of the Covid-19 crisis. The oversight, understanding and mitigation of risks in a volatile, uncertain, complex and ambiguous world such as today, has become critical for the long-term performance and sustainability of organisations. In this respect, this report is timely and focuses on finance professionals’ crucial role in helping boards understand and navigate these interconnected and emerging risks in today’s VUCA world.”
Md. Sajid Khan, Head of International Development, ACCA said, “Disruption preparedness is now on top of boards’ agenda and many lessons have been learned on how effective risk management is put into practice. Building the right skills and capabilities in the workforce, understanding and aligning behaviours, developing leadership capabilities, and understanding in evolving corporate cultures are all vital.”
Both the ACCA and IOD continue to advocate together that board composition and diversity of thought are also important ingredients for managing risks effectively and not missing the opportunities that they present. The pandemic forced many to reconsider their policies for board succession planning and processes for appointing new directors to ensure they have the right people for the job and represent the range of stakeholders and top priorities of the organisation.
Rachael Johnson, Head of Risk Management and Corporate Governance, ACCA said, “Accountants cannot overestimate the importance of how they communicate these risks and opportunities because materiality is becoming an ever more powerful driver of strategy and risk management. By focusing on critical activities and testing their processes, controls and documentation, organisations can start laying valuable foundations for a more resilient future.”
In conclusion, boards today realise that risk can no longer be managed in isolation, and accountants, given their skills and professional duties, are in a privileged position to help them build more effective and ethical enterprise-wide approaches to risk management in this faster moving world we live in today. As guardians of information, accountants can help boards not only detect and better understand the emerging risks and opportunities facing them, but also foster the mindsets needed to think more long-term.