“The crisis resilience of accounting firms is tested thoroughly and ruthlessly in real time, especially with regard to issues such as tax transparency, gender equality and the future of auditing.” said Peter Barrett, UK director and head of crisis and special affairs. situations at World Infinite.
“It’s a stark reminder of the need for every business to undertake rigorous business continuity and crisis planning around a full range of risk scenarios, including high impact and low impact Black Swan events. probability too often overlooked in risk mapping and mitigation. “
While accounting firms should not underestimate the impact of possible crises, the burden of Covid-19 has been a learning curve for the industry.
“In the longer term, the accounting industry must seize the learning opportunity. Management teams routinely fail to heed the lessons of crises and take appropriate actions to build risk resilience and mitigation actions, to avoid future mismanagement of similar scenarios, ”Barrett said.
Preparing for the eventuality of a black swan is key to minimizing risk, especially since management teams may underestimate the impact on businesses, according to Barret.
“We always recommend actively planning for the worst case scenario. Even the most experienced management teams are subject to over-optimism in their assessment of probabilities and risks. Crisis and business continuity planning typically focuses too narrowly on a relatively small selection of potential outcomes and is often based on the “ideal” crisis unfolding in an unrealistic, predictable, and linear fashion. They rarely do.
When preparing upstream for crises such as Covid-19, companies need to ensure that every part of their infrastructure has a planned response.
“Covid-19 demonstrates the importance of ensuring that an organization’s entire crisis response infrastructure – covering incident response plans, business continuity planning, crisis management and communication strategy, leadership decision making and more – works smoothly as a collective whole, not also a series of siled initiatives.
Barrett is also calling on management teams to recognize the social distancing effect caused by Covid-19, which could negatively impact accounting professionals.
“The key is to focus on the core businesses and needs of your critical stakeholders: employees and customers while thinking laterally and in the long term. Remote work is easy for some, but difficult for others. Businesses should not underestimate the physical and emotional impact of social isolation and the increased stress of crisis conditions, ”he adds.
Once the immediate dust settles, Barrett warns that companies “perceived to have mismanaged their response to the crisis” should plan for “a difficult questioning.”