The business environment evolves, organizations evolve and people’s roles and contributions must evolve as well. Some risk managers have expressed frustration due to insufficient resources or support from senior management. Risk managers who have an active role in financial reporting compliance activities (e.g., SOX 404) however, find their departments’ visibility and influence within the organization high. Such was the case at Alfa Corporation.
This month's Treasury & Risk Magazine cover story, Audit Busters, explains the business case for the CRO partnering with the CFO at Alfa Corporation resulting in the transformation of their compliance programs to serve their business strategy while reducing their external audit hours by 60% at the same time.
With the right ERM infrastructure, the CRO can now offer your CFO the capability to manage tomorrow’s financial surprises today while there is still time to change the outcome. New AS5 legislation that mandates a top–down, risk–based approach provides risk managers with the opportunity to deliver measurable financial and strategic value while building the right ERM infrastructure that easily extends to all areas of the business.
The stakes are high:
If history repeats itself, according to CFO magazine, How a Material Weakness Can Cost You, more than 11 percent of companies with financial reporting and compliance programs will be found to have material weaknesses. And about 86 percent of material weaknesses will be discovered not by management or consultants but by external auditors. The consequences are real. Companies affected see more than a 4 percent drop in stock price; their CFOs face a 62 percent likelihood of being replaced; and a 150 percent plus jump in ongoing external audit fees.
As problems like these mount, CFOs are beginning to realize that an ERM-based SOX effort works much better than a controls-based SOX effort or an ad hoc approach to risk.
Part II in the Series: The 21st Century CFO and CRO: Partners in Value
High Cost of Risk Management Software:
As a small business owner I have a major issue with the so-called risk management solution providers. These companies make their products (and services) available but, at a price. In most cases, the software tools that are supposed to assist small and medium sized business are so expensive that they can only (and just only) be afforded by the big league corporates.
In an attempt to find a reasonably priced software tool that will assist me in running and managing my business, I Googled and Yahooed all possible keywords but only found these gluttonous corporate service providers that over the years have gotten used to their overindulged greed for lots of money. Every time you request a quote, the process of selling their over sized and over priced services and product with monthly subscriptions and license fees that are unaffordable.
Then, I came across an online risk management tool that offered me a fair variety of options to choose from. It offered my an entry level subscription that is affordable without limiting the functionalities within their web services which allows me to manage and analyze my business plan and identify and evaluate the risks linked to my business plan. Now, for the first time I am able to really understand my business and the issues that could impact there on at a fraction of the cost.