Endorsement for Airmic-CIMA risk paper from US accountancy association

CGMA, the US-based international association for management accountants, has published a long article in its membership magazine based on Looking through the lens­ ­­– the risk paper produced by Airmic and CIMA (Chartered Institute of Management Accountants). Written by Gillian Lees of CIMA, it describes the paper as “a risk-identification framework that can help executives find peace in preparation and knowledge”.

It is, however, much more than just a summary of the Airmic-CIMA work. It develops the risk themes, and provides insights into how risk can be used to support organisations.

Airmic and CIMA published Looking through the Risk Lens, in June as a preliminary consultative document. It argues that companies should take a fresh approach to risk by explicitly linking a company’s risk vulnerabilities to its business model.

According to the paper, boards are under growing pressure to understand and explain the risks facing their business, but many senior executives feel they do not have the right tools and knowledge to have meaningful risk-related conversations and to cut through to the risks at the very heart of the business strategy.

It therefore urges businesses and risk professionals to consider a new approach to risk whereby the four components of a business model – inputs, business activities, outputs and outcomes – are used as a basis for identifying the risks found in each layer of the business’s value creation process.

This will not only allow boards to receive an overarching view of risk but will also make it easier to scrutinise the sustainability of how the business makes money.

Click here to read the CGMA paper

Click here to read Looking through the Risk Lens