- Finance chiefs say organisations must be more resilient and less susceptible to macro-economic volatility
- Less than a third think the U.S. debt crisis will throw the global economy into recession
Global business is too easily knocked off course by short-term economic crises, such as the current U.S. debt crisis, according to a global survey of finance and business leaders who hold the Chartered Global Management Accountant (CGMA) designation.
The Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA) surveyed over 1,300 members for their perspectives on how economic crises affect long-term business planning.
- Only 31% of respondents believe the ongoing US debt crisis will ultimately push the global economy towards recession.
- Despite this more than half (53%) expect higher U.S. interest rates and 70% anticipate a weaker dollar.
- 60% of respondents said that business is too sensitive to economic crises
- 57% agreed that their organisation must seek new ways to be resilient and less susceptible to macro-economic volatility.
CGMA business experts make up the world’s largest community of management accountants and guide business decisions across the globe, including at 95 of the world’s top 100 brands and 91 of the Fortune 100. They hold senior positions, including CEO, CFO, and Finance Director, and have a broad perspective on the long-term prospects of their organisations, their markets and their regions.
Charles Tilley FCMA, CGMA, Chief Executive, CIMA, said:
“There will always be another U.S. debt crisis, Arab Spring or Eurozone disaster just around the corner.
“This uncertainty simply cannot drive business strategy. These ‘grey swans’, as some business commentators have termed them, are prompting organisations to cut spending and investment at a time when innovation is absolutely vital to our economic health.
“Indeed the seizing of opportunities is key to long-term survival and so we must all plot a suitable course between risk and innovation, managing the approach and mitigations put in place to address these uncertainties.”
Barry Melancon CPA, CGMA, Chief Executive Officer, AICPA, said:
“The repercussions of U.S. debt ceiling and spending decisions will reverberate across the global economy and may touch many of the world’s businesses. Management accountants are bracing for short and long-term implications, even as they look for ways to make their businesses less vulnerable to the pulses of geo-political forces.”
Five top tips for business leaders to build resilience
It is vital for organisations to adjust their risk radar and anticipate the impact of such scenarios on investment and future growth without being diverted from creating a suitable long-term strategy. This will build resilience in the face of ongoing economic uncertainty.
- Understand your business model. What creates, and could potentially destroy, value in your business?
- Harness the power of transparency. Create a line of sight between capital sources and how it will be invested in the sustained success of the business, beyond the short-term.
- Ensure robust information flows. Build confidence in the right information that drives investment and risk mitigation decisions.
- Go beyond defining a risk appetite. Have a risk attitude that empowers all in the business to take appropriate risks that drive growth and opportunity.
- Be clear on the skills and talents you need now for tomorrow. Identify and close potential skills gaps you may have when considering your future business model, markets and innovation agenda.
- Email survey of 1,302 CGMA designation holders operating in 69 countries conducted w/c 14 January 2013
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Notes to Editors
Chartered Global Management Accountant (CGMA)
Two of the world’s most prestigious accounting bodies, AICPA and CIMA, have formed a joint-venture to establish the Chartered Global Management Accountant (CGMA) designation to elevate the profession of management accounting. The designation recognises the most talented and committed management accountants with the discipline and skill to drive strong business performance.
Chartered Institute of Management Accountants (CIMA)
The Chartered Institute of Management Accountants, founded in 1919, is the world’s leading and largest professional body of Management Accountants, with more than 195,000 members and students operating in 176 countries, working at the heart of business. CIMA members and students work in industry, commerce, the public sector and not-for-profit organisations.
American Institute of CPAs (AICPA)
The American Institute of Certified Public Accountants (AICPA) is the world’s largest association representing the accounting profession, with nearly 386,000 members in 128 countries and a 125 year heritage. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.