‘Although we will never be able to predict all potential shocks, long-term planning should lead to better business capabilities.’
I am honoured to introduce myself to you as the new CIMA president and vice-chair of the Association of International Certified Professional Accountants. Some of you may know me from the years I have spent working with colleagues on CIMA Council and latterly as deputy president. It is a privilege for me to be entrusted with this role. Particularly so as the world is going through such a tumultuous time. This is a time when our skills as finance professionals will be highly valued as we help our organisations navigate their "new normal".
This is probably not the column I would have written at the beginning of the year, against a more "familiar" backdrop of economic uncertainty and Brexit. The emergence of the coronavirus changed that abruptly. As I take on the CIMA presidency, it strikes me that my presidential platform for the year, promoting "responsible finance", is unexpectedly timely. COVID-19 has highlighted why finance needs to reimagine how it operates and presents an opportunity to drive a positive impact on our environment and wider society.
We live now in a beleaguered business environment full of uncertainty, and the global economy has an enormous task ahead to get back on its feet. Now is the moment for management accountants to shine and establish our reputation in finance as value creators for the long term, challenging the perception of our being the high priests of cost-squeezing.
I've worked in both the public and private sectors, seeing their differing focuses on financial and performance management, and associated timelines. I am struck by the period-driven and purely financial focus of much of the reporting in the private sector. This is in contrast to public-sector finance teams, who look more broadly at performance over several years — though within annual budget constraints.
I think we can combine the best of both models to improve the ways finance operates.
A good resource to start with is CIMA's research on business model concepts. The aim here was to enable finance leaders to understand value both on the balance sheet and contained in intangible assets such as brand and key relationships. I recommend you read it as it will help you to develop your ability to identify, understand, and reimagine risk to improve business decisions for the long term.
You can find further insight within Integrated Reporting (IR). The International IR Framework forces companies to look at themselves and the context in which they operate. It gives value and insight to the intangibles of business: things such as whether people trust a brand or how a company behaved during the pandemic — predictors of business recovery and success. It's like seeing the business in 3D rather than 2D. It means you can build resilience and sustainability into your business, scenario-plan, and mitigate new or unforeseen risks.
Although we will never be able to predict all potential shocks, long-term planning should lead to better business capabilities. Sustainability makes good business sense because customers are more willing to engage with companies they see as socially responsible. It is in the interests of businesses now and in the future to start implementing a new way of thinking.
As we turn our focus to business recovery, I look forward to sharing more of my thinking on this topic through these columns, and I welcome your thoughts. Together we can make responsible finance the catalyst for change and a better future.
It's going to be an interesting journey.
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