The past two years will be defined in history as one of the fastest changing and riskiest periods seen in a generation. Alongside the coronavirus, business and society also face huge existential risks from rapid climate change—perhaps the biggest risk of all.

Environmental, social and governance (ESG) risks have been brought to the fore. And the challenge, as the UK at the time of writing lifts lockdown restrictions, is how to continue managing ongoing disruption and better preparing for more uncertainty.

In our recent report, Rethinking Risk for the Future, we see now as an unmissable time for the accountancy profession to reassess its role in effective risk management as a result of this fast changing, interconnected landscape.

As “guardians of information”, professional accountants can provide unique insights and analytical skills essential for optimising boardroom decision-making. Through their reporting and predictive analytics skills, company directors and financial professionals with accountancy backgrounds can help organisations not only detect and better understand the new universe of risks, consequences and opportunities, but also cultivate the mindsets needed to think more long-term and instil a healthy, risk-conscious culture.

Risk takes centre stage

We’ve all learned new and vital lessons about the scope of risk governance over the last year, with disruption preparedness now topping the board agenda.

We engaged with members around the world for this report, capturing their perspectives on building operational resilience through enterprise risk management (ERM), financial reporting and predictive data analysis. What’s clear from their feedback is that boards need to truly understand the strategic and business risks that their organisations face in the short, medium and long term.

By providing deeper insights for the boardroom, accountants can help organisations make timelier and better informed decisions for shaping a more resilient and sustainable future.

Seeing the big picture

Professional accountants are at the heart of risk and sustainability, and it is time for the profession to show how it helps organisations change behaviour, rethink risk and set the tone from the top.

Risk can no longer be managed in silos—it must be part of an organisation’s ecosystem. Accountants need to measure not-so-easy-to-quantify risks and provide boards and senior management with the narratives necessary to plan and prepare better. There are many ways accountants can help boards and senior management foster a sustainable mindset and it starts by looking at the bigger picture, keeping long-term values and all stakeholders’ needs in mind.

Stakeholder mapping is an effective exercise that involves identifying, analysing and prioritising the groups that have a stake in an organisation’s activities. It helps decision makers understand stakeholder expectations better and reconsider the most impactful issues.

Risk appetite and the board

The board should also understand and articulate its appetite for risk. A risk appetite statement effectively sets the tone for risk management at an organisation and should be determined and owned by the board. It enables decision-makers to accept consciously the risks that correspond with their organisation’s purpose and strategy and with the available resources required to manage them. The organisation is also more likely to meet its strategic goals when its appetite for risk is aligned with operational, compliance and reporting objectives.

A diverse composition of board and board committee members, appropriately representing various stakeholders, is essential to managing risks effectively and not missing opportunities. We also see renewed attention about risk and audit committees—whether they should be separate or joined and how to go about that.

Before the pandemic, non-financial corporates rarely set up a separate risk committee if it was not required to by regulators. But we have found that this is changing as concerns about ESG, digital transformations and other emerging risks have become so pressing. There is no one-size-fits-all approach here, but what’s needed is pragmatism and flexibility in applying risk governance structures and ensuring they are truly helping the organisation meet its objectives.

A place at the board

Given their competencies and professional duties, accountants are now in a privileged position to both inform and be at the boardroom table—as the CFO, CRO or a non-executive director, for example. They can optimise their storytelling skills in new ways by creating more dynamic metrics and reporting methodologies, taking on a more advisory role in explaining the facts and possibilities behind the numbers, breaking them down and putting them into context for their organisations.

To tackle the threats and opportunities ahead, accountants can lead on more collaboration between the board and senior management, and help organisations act on the ESG matters that are most relevant and material to their organisations. They can work with the board, business leaders and policymakers to help grasp how digitalisation and new technologies can help avoid harm to people and the planet.

Download the Rethinking Risk for the Future report here.

Rachael Johnson is head of risk management and corporate governance at ACCA.