International Podcast Day special: The best of the FM podcast

To celebrate International Podcast Day, we've compiled some of the top insights offered in 2021 episodes from speakers all over the world. Learn more about advice for fighting ransomware, the role of finance in navigating Olympic Games uncertainty for a medal-winning team, how to spot "greenwashing" in ESG reporting, and more from a five-part FM series on ESG. International Podcast Day is 30 September.

What you'll learn from this episode:

• How a rise in remote working presents more ransomware risk.
• Why one finance leader says there's no opt-out clause for management accountants on ESG.
• How potential investors can make sure a company is true to its word regarding ESG initiatives.
• Why one of the early questions about an innovation project should not be "What's the ROI?

Play the episode below or read the transcript:

To comment on this podcast episode or to suggest an idea for another episode, contact Neil Amato, an FM senior editor, at Neil.Amato@aicpa-cima.com.

Transcript:

Neil Amato: The 30th of September is International Podcast Day, and so on this day on the FM podcast, we're celebrating the occasion with a look back at some of the international voices who have shared ideas and insights so far this year on the podcast. I'm Neil Amato, a senior editor at FM and one of the podcast's hosts, and I'll be reviewing some of the highlights from the podcast, which truly is global in nature, with editors on three continents and the perspective of experts from many corners of the world.

One topic that is truly global is ransomware and the risks associated with it. FM's Drew Adamek spoke with Gerry Glombicki, a US CPA and director in the insurance group at Fitch Ratings. Glombicki recently was the co-author of a report on ransomware, and the discussion touched on many key aspects of defending against such attacks. Here's one question and one answer from that interview related to how finance should approach cyber risk.

Drew Adamek: In this increased threat landscape, how should CFOs and finance departments and finance professionals be thinking differently about cyber risk, particularly post-COVID?

Gerry Glombicki: One of the things that's evolving is the risk in cyber risk. As you mentioned earlier, there was roughly almost a 500% increase in ransomware tax year over year. I think when companies look at their risk posture, their risk appetites, they have to do a risk register and see all the risks that are available to them subject to and try to see again those four pillars if they're going to accept it, if they're going to mitigate it, if they're going to transfer it, they're going to avoid it, and what they do.

As you're seeing, as more companies go on to the internet, as more companies just give employees access to the emails, as more companies can actually work from home — all of these are extra nodes onto the network. These nodes could work perfectly fine for you whether they're secure or not, but if they're not secure, it's also a possibility for a threat actor to enter into your landscape and then to possibly do harm and perhaps immense harm.

What you have to do is a business impact analysis as a company and see what your assets are, what those risks are, and ultimately how they line up with your risk appetites and whether you're willing to accept these risks or try to transfer them or try to hire some third party to lower them. Ultimately, this is the actions that the company's management has to do.

Amato: The Summer Olympic Games are obviously international and while delayed a year by the COVID-19 pandemic, they were held in Tokyo last summer. In the sport of hockey — it's field hockey to some, but definitely the outdoor version played on turf, not the ice version played inside, one of the teams in the women's competition was Team GB, the squad from Great Britain, which won the bronze medal. Oliver Rowe interviewed a finance leader who works for the organisation that sent that team to the Games, navigating all the uncertainty that went along with just such a task.

Kuldeep Kaur, ACMA, CGMA, is finance and administration director for England Hockey. She explains how scenario planning, data-led decision-making, and effective communication combined to lead the sport during the pandemic and the resulting Olympic Games scheduling uncertainty.

Kuldeep Kaur: I really don't think we can ever underestimate that from an athlete and coach point of view, changing the timing of the Olympic Games, and the calendar of events that proceed that, it comes at a heavy cost because that preparation sometimes planned eight years in advance to give us the best opportunity for success. That preparation provides crucial marginal gains, and they can be the difference between a win and a loss. Having said that, I think the game has dealt with it as well as it can, in my opinion. How have we achieved that? The communication on Health and Safety has been challenging, but we've met that challenge. The teams reacted quickly. We found effective means to relay messages in a remote environment and implement the necessary protocols.

The game also invested a lot of time and effort in becoming even closer to partners such as the British Olympic Association and to be more strongly aligned to other sports. We worked together to meet the challenges in the environment to adapt our planning accordingly. We kept close to government on elite dispensation pieces and any guidance that they were issuing on the relaxing of rules around COVID restrictions, and wherever we could allow squads to train in environments, be flexible, and arrange competitive test matches, we did. And it's that flexibility and adaptability in the changing tide of events that has been critical to managing it successfully. But when I look at it, I think we are still in uncertain times, we remain in that environment. There are many things along the way that we fine-tuned as the pandemic has gone on. We've kept an open mind, been flexible to really adapting and learning and growing as we have gone through, and I think we will maintain that philosophy.

Amato: Another highlight from the FM podcast was a five-part summer series that several editors contributed to on environmental, social, and governance (ESG) issues. We will link to that series landing page in the show notes for this episode, and that landing page will have links to all five episodes in the series.

Alexis SeeTho and Sabine Vollmer took the lead on the series, each having two interviews among the episodes. In one part of the series, Alexis talks to Matthew Hurn, FCMA, CGMA. Hurn is CFO for Disruptive Investments at Mubadala Investment, an investment vehicle owned by the government of Abu Dhabi. Here's their exchange on what to look for in a company's reports and actions to make sure that company is not just "greenwashing" when it comes to ESG reporting.

Alexis SeeTho: There's a lot more companies putting out ESG information these days. In assessing companies to invest in, how do you ensure that the ESG information reported reflects the reality of the business, that it's not a form of greenwashing, for instance?

Matthew Hurn: We follow our own data due diligence processes. We look always to what's publicly available. We do background checks. We hire external consultants to undertake reviews for us as well. But we also have deep, meaningful conversations with the investment team, the management committees, in all the businesses we're going to invest in.

With ESG, you can tell really quickly that it's not authentic. So I think for many people [they'll say], "Of course we're ESG." But what does it really mean? And if you double-click, does it hold true? And for many organisations that we invest in now, ESG has to be reflected in the company culture and the company values.

And therefore, when you start looking at doing the due diligence at these companies before investing, it's easy to double-click and really [ask], "What is your track record?" I think the harder part is how do you quantify and measure it sufficiently and in a comparable way? Because at the moment there isn't necessarily a standard, but it's more [of] if you see it, and you hear it, believe it, then actually the quantification thereafter is something that could follow up.

So I think there's a role that we all have to take: Having had meaningful conversations, having engaged and assessed the culture, the language, the passion for it. Do we believe it's lip service? Or greenwashing, as you say? Or is it authentic? And can it be substantiated in such a way that we're comfortable and confident that they really are following up and doing what they say they do?

The E aspect is really easy to do. You can assess now people's carbon footprint. You can determine what is it they're doing, the impact it's having on the environment, whether it's water usage or the CO2 emissions, whether it's raw materials, whether it's food waste. There are so many elements of the E aspect that you can determine what's there.

The G part is actually easier to do background checks on. If you want to do background checks on individuals, or the way the companies operate, or the board structures or the appointment of the board, senior management, making sure it's fair [and] reflective of society and gender equality, and the business is run in accordance with best practice from a governance perspective. That's much easier to do.

I think we all as society are more prepared and aware of those aspects than we are probably the E side. It's more of an art than a science.

Amato: To cap off the ESG series, Oliver Rowe interviewed Paul Ash, Association chair and CIMA president. Oliver asked this as his closing question "Why should management accountants be interested in ESG and sustainability?" Here's the answer.

Paul Ash: Well, Oliver, I don't think that they have an option, really, because there isn't an opt-out clause on ESG. Whether we like it or not, ESG already defines us and our profession in so many ways, and we need to ensure that our learning provider partners also understand how important ESG is and how important it is to be entirely integral for students' learning and understanding of what their future role will be as a management accountant.

Amato: Another focus area for management accounting leaders is innovation. It's a big, unwieldy topic, with many ways to approach it, and our guest on a March issue is someone with a wealth of innovation experience. Her name is Amy Radin, a former corporate innovation executive and now an author and also a member of the board of directors for the Association.

Radin wrote an article in the December 2020 issue of FM with the headline "How CFOs Can Enable Innovation Now". One section touched on the questions that should be asked as early-stage metrics are being set for innovation projects. Here's Amy Radin on why one such key question should be about market and not about return on investment.

Amy Radin: So, first of all, I'll say one of the best ways to sink a potentially, high-potential innovation is by judging it by the wrong metrics. And so often what happens is organisations have incredibly well-defined, well-validated metrics that they use to monitor the existing business and whether the business is on track or not. And those are great, but they can be completely inappropriate for a nascent concept.

So, what I like to do is encourage CFOs, if the first question you're asking is, "What's the ROI?", I would hold up a red flag. On a new concept that's never been tried in the market, you may have no idea, and so I would encourage you to think a lot more like founders do in the startup world. When they're looking at a brand-new concept, they're not saying, "How much money am I going to make?" or "What's the ROI?" They're saying, "Well, how big is the addressable market?", so, how big is that denominator?

How many people or businesses or organisations are out there that based on my best guess at this point — because that's what it's going to be, intelligent guesswork hopefully backed up by some real market insight — how big is the universe of entities that for whom I think this concept would be relevant? Then of that universe, how many of those do I reasonably expect I could connect with? Right? So, however you're defining your footprint, are they findable through the channels that you're anticipating you would launch your distribution through? So, it's going to be the addressable market isn't going to be 100% of universe, it's going to be some subset honed by just some smart assumptions.

Amato: Again that was Amy Radin. Thanks to Amy and all the guests on this "best of" episode for International Podcast Day. We hope you've enjoyed it and we hope that you'll subscribe, rate and review the show wherever you get your podcasts, and also that you'll share it with listeners you think might be interested in the content. Again, I'm senior editor Neil Amato. Thanks for listening to the FM podcast.