Canadian Management Accountants Respond to Risk

Though not specific to telcos, I thought it worth sharing an excellent report from an unexpected source. Eric Krell of The Society of Management Accountants of Canada has authored Forecasting the Future Role of the Management Accountant. Why should you care (if you are not a management accountant)? Well, because most of the report can be summarized by this statement:

Management accountants will play a central role in organizational efforts to expand and strengthen enterprise risk management efforts.

Krell identifies a range of areas where accounting skills will be turned to risk measurement, right across the business, including Human Capital Management, regulation and security. Yup. He says that. Why should management accountants do that? In short, because they will apply rigourous measurement methods to forward-looking risk. Krell says that in the future, management accountants

…will invest more of their time looking forward to scout out potential threats and opportunities, while spending less time looking backward to track and report past financial performance. They will do so by transforming data into select insights and indicators that inform more agile and more accurate forecasting and planning processes that enable the organization to more effectively adapt to rapidly changing conditions.

That sounds like risk management to me, and the topic of risk is found everywhere in the report, except for the title. His vision is for a data-driven, accountancy-led, quantified approach to risk applied to all areas of the business: strategic, operational and even reputational. As such, the report reads like a manifesto for managements accountants to step up and deliver the kind of ‘integrated, comprehensive’ risk management others talk about, but do not know how to implement. Krell notes the current flaw with most people’s conception about risk management: that it is about mitigating problems. Of course, that backward-looking reactive approach is not risk management at all. It is just another layer of management that kicks in because you assume the primary of layer of management did not do their job right. Hmmm… not a model of efficiency. Krell’s report repeatedly highlights how risk management involves making risk-informed decisions, and he positions management accountants as key players in delivering risk intelligence at the time when decisions are being made. Too many working in the field of risk simply cannot get their head around the difference between making a risk-informed decision and noting a risk some time after the relevant business decisions had already been made. Good on the management accountants of Canada for correctly identifying the risks to their businesses – and the opportunity to expand their remit. Will others be intelligent enough to compete?

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.