When Protiviti conducted a top risks survey among more than 1,000 executives and board members in the third quarter of 2019, few had imagined the risks they’d be facing today brought by the COVID-19 pandemic. More than half of the finance professionals who attended a recent webinar on creating an intelligent workplace said they never saw this type of disruption coming. Less then a quarter had a vague awareness of a possible event like this affecting their business. And only 5% considered it a top risk before it happened.
Nevertheless, the pandemic and its disruptive effects – economic, human, and operational – has brought the top risks identified in our survey back into focus. What executives had on the radar late last year is on the radar even more now, with a whole new urgency. Regulatory risk, the number one concern in the survey, looms large as regulatory agencies are issuing new guidance daily, with recently adopted standards being suspended and pending adoptions put on hold. New rules are being made overnight, requiring companies to realign their systems with matching speed.
The next two risks, economic conditions and talent and succession challenges are also exacerbated by the crisis. What was an economic concern just a few months ago is a grim economic reality now. And a workforce that had to be quickly re-engineered to work remotely highlights even more sharply the need for flexible, knowledgeable, technologically adept and communicative individuals to lead and manage dispersed teams.
Rounding up the top five 2020 risks are ability to compete against digital firms and cybersecurity and privacy. Needless to say, digital firms have had a much easier time maneuvering lockdowns and other challenges – think Amazon, or fintech firms that never relied on physical interaction with their customers in the first place. And those with modern IT architectures, existing VPNs and mature BYOD policies are having an easier time securing their workforce remote environments because they were already ahead of the game.
For finance executives, the challenges are much more specific. How do we close the quarter when we can’t walk over and collect reports from our colleagues? How do we take hastily scanned receipts and documents and turn them into data that can be input quickly into our financial system? And how do we ensure that the data is complete and the process by which it was collected is reliable?
On our webinar, Neil Koenck, Associate Director with Protiviti’s Finance Transformation practice, discussed some of the technologies that have – for those who had the foresight to adopt them – made this work easier. Together, these innovations help an organization create an intelligent workplace – one that is flexible, agile, resilient and adaptable in situations such as the current one. Many of these technologies have been around for some time, such as OCR, and more recently, robotic process automation, which can used to collect and assemble data from documentation such as contracts. Dynamic process mining can be used to examine the integrity of a process and identify duplication and omissions; and machine learning and AI are being increasingly harnessed to identify outliers in data and learn from behavior. Neil discussed the application of these technologies to the finance process during the webinar and offered several specific examples. We recommend listening to the free recorded version of this discussion here.
For those who have not had chance to adopt these digital tools or have not adopted them at scale, the time is now. Pilots and proofs of concept that have been waiting for attention from senior leadership should be brought into the light and prioritized for adoption as appropriate. Any opportunity to automate a process to make it easier to perform with less human interaction or to perform it remotely should be considered, as well.
As companies emerge from the crisis, alignment on initiatives to ensure the future resilience of finance operations should be a top priority. Leadership needs to communicate its vision of the post-crisis state of the company, including its vision of how increased automation will help the organizations weather future crises. It’s very important that finance leaders and other executives understand the shared mission, communicate it clearly to the company at large and use an aligned change management approach to achieve it. Having clarity and alignment further increases flexibility, enabling companies to react to disruptions and economic currents in a cohesive and agile manner and inoculating them against stagnation and paralysis in crisis situations.
Access the free on-demand webinar at this link.
Neil Koenck, an Associate Director with Protiviti’s Finance Transformation practice, contributed to this content.