Navigating the Ukraine conflict

Management accountants need to identify and prepare for a wide range of risks as the Ukraine crisis continues. Here are some resources to help.

Geopolitical risks can be challenging to mitigate in our highly interconnected global ecosystems. The Russian military invasion of Ukraine already has had multiple consequences for businesses everywhere. Apart from the immediate impact of the invasion, sanctions — particularly those on Russia's central bank and some commercial banks — have introduced new risks for businesses involved with Russia and Belarus.

Finance departments have been helping their businesses prepare for the possibility of an invasion. However, the speed at which the crisis has unfolded may still have taken many businesses by surprise.

Now, finance is working through the disruptions of the pandemic, supply chain issues, rising inflation and interest rates, and rising geopolitical risk. Management accountants must have the mindset that other disruptive global events can happen at any time and prepare accordingly.

Management accountants perform a vital role in identifying risks, as well as developing, implementing, and refining controls that maintain and improve their businesses' resilience. Finance teams must be dynamically scenario-planning with this ongoing disruption and ensure their businesses are well prepared for the future. They should be prepared to introduce controversial risks for discussion at the most senior levels in their businesses.

There are a number of risks that business leaders and finance professionals need to be aware of with the current crisis. Some of these may not happen, some are not exclusive, and the following list is not exhaustive. Different businesses and sectors will have different risks and exposures.

The toolkits and articles linked to in this article can help manage the risks.

Supply chains

The events in Ukraine will have consequences on supply chains for a number of reasons, and it will take time for global supply chains to readjust. Many businesses will have rethought their supply chains during the pandemic and should apply the same mindset to the current crisis. However, issues with global supply chains are only likely to worsen. According to research by Dun and Bradstreet, at least 374,000 businesses worldwide rely on Russian suppliers and at least 241,000 rely on Ukrainian suppliers.

The supply chain impact doesn't stop there. Ukraine and Russia are significant exporters of a number of key global products, including wheat, gas, oil, and steel. Russian and Ukrainian sailors also make up 14.5% of global shipping crews.

Secondary sanctions are not unthinkable. These could be imposed directly from Russia or Belarus or by countries sympathetic to them. Supply chains include not just immediate suppliers and immediate customers but cascade all the way to your supplier's suppliers and customers' customers. Even if not affected by sanctions now, businesses will benefit from being able to make an early assessment of the financial, operational, and reputational risks arising from any future sanctions.

The key questions your finance team should be thinking of now are:

  • What new sanctions are governments discussing, and how might they affect my business's supply chain?
  • What other geopolitical risks could happen, and how could these affect my business's supply chain?
  • What actions should I be taking now to improve the resilience of my business's supply chain in the event of other geopolitical risk events?
  • What checks have I conducted to understand the ownership of my business supply chain and any sanctions risks?
  • Have I analysed our extended supply chains and considered regulatory and reputational risks?
  • Have I discussed risk related to secondary sanctions, reputation, and geopolitical exposure?

Don't be afraid to think the unthinkable on behalf of your senior leadership.

For more about supply chains, see these articles and blog posts:

"Finance's Crisis Role in Managing Supply Chain Risk"

"Chain Reaction: Building Resilient Supply Chains"

"5 Ways to Improve Vendor Communications in a Supply Chain Crisis"

"How to Optimise Your Supply Chains"

"How Finance Leaders Can Rethink the Supply Chain in 2022"


Inflation has been rising in recent months, and that is only likely to get more severe now. Oil prices briefly rose to over $130 a barrel in the aftermath of the initial crisis.

In the UK, a House of Commons Library paper says inflation is now forecast to peak at over 7%, and the consulting firm RSM has predicted that US inflation could exceed 10%.

This rise in inflation is undoubtedly going to have an impact on businesses, and finance teams will need to manage and operate in a higher inflationary environment for months to come.

To help counter the higher inflationary climate, assiduous financial and strategy planning is needed. The questions you should be asking yourself now are:

  • Have I modelled different geopolitical risk scenarios for our business?
  • Have I modelled a range of inflation scenarios?
  • Have I developed mitigations to enable our business to continue to generate a healthy free cash flow?

When moving forward, business leaders and finance teams must consider how price inflation will impact their consumers and what impact that will have on their operations and business model. Likewise, consideration of what help can be given to staff in the volatile economic climate should be undertaken. This does not necessarily mean wage increases but could be about what help and support can be given so staff can better manage the changing economic and business environment.

For more on inflation, see the following:

"Finance Leaders Do More Than Cost Cuts to Battle Elevated Input Prices"

"Keep Inflation on Your Radar"

"Inflation: Q&A With an Internal Audit Expert"

"Inflation Risks Are Real, but Manageable"

Interest rates

Higher inflation is likely to prompt rising interest rates. Last month the UK's Bank of England raised interest rates to 0.5%. In the US, Federal Reserve Board Chair Jerome Powell recently told Congress he expects to raise interest rates. The European Central Bank is also coming under pressure to raise interest rates.

Finance teams should be asking themselves whether they can withstand increased interest rates, what higher interest rates would mean for any debt the business has, and how higher rates may affect capital investment, and then build rising interest rates into future scenario planning.


International sanctions against Russian and Belarusian individuals, banks, and other organisations must be top of mind, as well as any countersanctions the Russian and Belarusian governments may impose. This requirement impacts all members, whether in business, practice, the charity and not-for-profit sector, or the public sector. Members are also advised to consider their ethical obligations in meeting sanctions and anti-money-laundering compliance.

To help comply with current and any future sanctions imposed on businesses and/or individuals, you should ensure that:

  • You have the appropriate systems and processes in place to comply with the sanctions regimes.
  • All relevant staff are aware and trained on the new sanctions requirements.
  • You keep updated on new sanctions not just from your own jurisdiction, but any other jurisdiction where an international business has operations.
  • You screen existing clients and customers (often part of due diligence for new clients and customers). In the UK this list should help.
  • You report a breach or suspected breach of financial sanctions to the appropriate agency in your jurisdiction. In the UK you must report to the Office of Financial Sanctions Implementation (OFSI) if there has been or is a suspected breach of the financial sanctions.

For more information and advice on how to work with the sanctions regimes, the below links should help:

CIMA: "UK Sanction Measures in Relation to Russia"

UK Office of Financial Sanctions Implementation

CIMA ethical guidance

UK government sanctions guidance

US Department of the Treasury sanctions guidance

EU sanctions regime

List of entities and individuals sanctioned by the EU

Money laundering and fraud

In the current crisis, Western governments have increasingly focused on cracking down on Russian money laundering. Accountants play a key role in detecting and preventing money laundering and fraud.

All those in the business must remain alert to these risks and must work within their jurisdiction's anti-money-laundering regimes. "Tone from the top"' has never been so important, and senior management should undertake a review of its financial crime risk strategy to ensure that processes and procedures remain robust during the current crisis. There should be clear communication to all staff on changes and expectations and a culture of vigilance encouraged.

Members working in practice who are supervised for anti-money-laundering and counterterrorism compliance must reassess the risks to their practice. This includes conducting a thorough review of its processes, procedures, and policies, paying particular attention to the practice risk assessment and ongoing staff training. If you have any suspicions of money laundering taking place, you must report it to the financial intelligence unit within your country of residence.

In the UK you must report to the UK Financial Intelligence Unit (UKFIU) positioned within the National Crime Agency (NCA) by submitting a Suspicious Activity Report (SAR). It is essential that SARs include as much detail as possible, and the UKFIU provides guidance on submitting a quality SAR and on requesting a defence from the NCA to a money-laundering or terrorist-financing offence. Every SAR should include a glossary code.

The NCA has recently introduced a new code (XXSNEXX) which relates to suspicious activity consistent with money laundering and linked to entities sanctioned by the UK, US, EU, and other jurisdictions. Further information is available on the NCA website.

Please note if you have reported to the OFSI under the sanctions requirements and also have suspicion of money laundering or terrorist financing, you must also submit a SAR.

Here are more resources on money laundering and fraud:

CIMA anti-money-laundering guidance

UK National Crime Agency suspicious activity reporting

CIMA: Fraud Risk Management: A Guide to Good Practice

US Financial Crimes Enforcement Network


Businesses across Europe, the UK, and the US have been warned about the risks of cyberattacks and malicious cyber incidents to their operations. The National Cyber Security Centre GCHQ in the UK issued guidance to businesses earlier this year saying they needed to "build resilience and stay ahead of potential threats".

You should be thinking about how cybersecure and resilient your business is and taking steps to ensure your business follows the latest government guidance in your regions to stay cybersecure.

Here are resources to help with cybersecurity:

"How to Prepare for Cyberattacks at a Time of Heightened Threat"

CGMA Cybersecurity Tool

"5 Cybersecurity Resources for Business Resilience"

Sovereign wealth funds, investments, and debt

Business leaders and finance teams will wish to give careful consideration to the location of investments or the makeup of any investment portfolio. Investors have joined many businesses in withdrawing funds and assets from Russia and Belarus. Some businesses may still have investments through intermediaries with those two countries. Finance teams should take steps to better understand the nature of investments held and what exposure they might have.

Also, some businesses may have debt exposure within Russia itself. Russia's central bank has already suspended payments to international bondholders who hold short-term government debt. These kinds of measures may be extended to other debt that is held within Russia. Finance teams should make sure they are aware of their organisations' full financial exposure, including around sovereign wealth funds, investments, and debt.

Finally, during the pandemic the Association produced a business recovery toolkit, and this can be used again now to help your business be ready to face the ongoing disruption.

CGMA business recovery toolkit

Ross Archer is director, public policy in the Global Advocacy Team at the Association of International Certified Professional Accountants, representing AICPA & CIMA. To comment on this article or to suggest an idea for another article, contact Drew Adamek at