10

Risks and their management

Risk management plays an integral part in helping ensure ACCA achieves its vision to be #1 in developing the accountancy profession the world needs.

We consider risk accross three broad types:

  • risks to the accountancy profession and the value that accountancy brings to society
  • risks to (the needs of) members, affiliates and students, and
  • risks that if left to crystallise could impact on our ability to deliver our corporate plans, strategy and our long-term sustainability.

The overall objective of our Enterprise Risk Management (ERM) approach is to help link strategy and risks as clearly as possible so that our decision-making is transparent, both internally and externally, and based on robust evidence.

Our ERM approach ensures we have a holistic view of the risks and opportunities facing us, drawing on our internal skills and knowledge, the expertise of external parties and consideration of the wider environment in which we operate.

Eleven risks are currently held on our corporate-level risk register (10 for the year ended 31 March 2019). Most of these risks are long-standing ones that are intrinsic to the achievement of our strategy and our operations as a global professional accountancy body. Two risks have been added during the past 12 months: the risks around the evolution and ongoing attractiveness of the ACCA Qualification and the profession as a career; and those associated with our significant programme of digital transformation.

The emergence of the Covid-19 pandemic during 2019–20 represents both a short-term threat to our operational environment as well as longer-term challenges to the attainment of our strategy to 2025, with prolonged economic disruption and societal changes influencing how the accountancy profession evolves. However, this uncertainty also represents opportunity, such as the acceleration of digital technology and ensuring that accountants have a key role in supporting economies to develop in alignment with the UN SDGs.

Ownership and oversight

Our corporate risk register records the top cross-cutting risks and uncertainties we believe ACCA faces. These risks, should they crystallise, have been judged to pose a significant threat to the successful delivery of our strategy and to ACCA’s longer-term sustainability.

Each corporate-level risk is owned by a member of the Executive team, with the entire team reviewing all corporate-level risks every month to reflect any market, legislative and/or operational developments, and adjusting mitigation and threat levels accordingly.

Our Audit Committee, comprised of Council members, exercises independent oversight of both ACCA’s corporate risks and our Enterprise Risk Management Framework, providing assurance to ACCA’s Council, via the Council Board, on the effectiveness of our risk management approach

Risk appetite statement

ACCA’s risk appetite statement sets out how we balance risk and opportunity in pursuit of achieving our strategy and is set by the Executive team.

We seek to empower our employees to be dynamic and innovative when taking decisions and prioritise actions in terms of risk, cost and perceived benefits. However, we also look to balance this autonomy against appropriate degrees of control and rigour, and continue to act in a consistent and transparent way to ensure we provide maximum value to our members, future members and partners.

Corporate risks and uncertainties

Risk

Key mitigations

Risk

Unable to accurately forecast income and costs

Key mitigations

  • Monthly review of variances in key income streams
  • Quarterly forecasting of financial performance to give early warnings of shortfalls
  • Ongoing financial scenario development based on latest information
  • Key costs forecasted on driver-based modelling
  • Exam Forecasting Forum reviews exam volume forecasts in consideration of capacity
  • Strategic Response Team established to protect member, student and partner value and exam entries in response to Covid-19 outbreak

Risk

Ability to operate is restricted

Key mitigations

  • Monthly monitoring and escalation of recognition risks
  • Leveraging existing forms of recognition and partnerships across our markets, including those with national bodies, regulators and relevant ministerial authorities
  • Cross-functional support, expertise and collaboration to strengthen the profession, develop and deliver partnerships and market recognition initiatives for enhancement of global recognition portfolio

Risk

Failure to comply with existing, changing or new regulatory or legislative requirements

Key mitigations

  • Internal/external audit process in place to address compliance
  • In-country legal advisers identify changing and new legislation
  • Subject matter experts across ACCA provide expert compliance advice
  • Global compliance policies in place owned by the Compliance Review Group

Risk

Loss of data or sensitive information

Key mitigations

  • Regular reviews against ACCA’s industry-standard controls framework to measure IT security status and maturity improvements and ensure targeted activities provide value to ACCA’s overall cyber security posture
  • Cyber Security Team contributes to compliance and regulatory governance forums to ensure understanding of compliance position and requirements on ACCA

Risk

Distribution network unable to support changes to ACCA’s business model

Key mitigations

  • Market Adoption Steering Group to support marketplace in embedding changes to ACCA Qualifications model
  • Increasing global computer-based exams capacity to support exam delivery
  • Global tutor support plan to support changes

Risk

Failure to comply with educational regulators’ requirements

Key mitigations

  • Quarterly review to confirm compliance with Ofqual conditions
  • Customer Service Regulatory Compliance Group established
  • Annual review and statement of compliance with Ofqual and SQA conditions
  • Continual improvement of production and delivery systems and/or processes to detect and prevent error

Risk

Supporting expectations, and ensuring exam progression, while promoting inclusion

Key mitigations

  • Enhancement of suite of learning support to remain relevant and engaging
  • Supporting capability building of learning partners and tutors to adapt to qualification changes and address market-specific challenges
  • Strategic partner approach with key Approved Learning Partners
  • Monitoring of student progression rates as early-warning indicator

Risk

Challenges and opportunities arising as a result of the UK’s exit from the EU

Key mitigations

  • EU Exit Oversight and Working groups to oversee and direct risk and control activities
  • Scenario analysis undertaken covering ACCA people, procurement and supply chain, data, recognition (audit) and EU student flows, with action plans for each area
  • Representing interests of ACCA and our members through responding to consultations
  • Maintaining brand through messaging and guidance to ACCA members and other stakeholders
  • Detailed and ongoing engagement with regulators
  • Management of foreign exchange risk with forward hedge in place

Risk

Digital transformation

Key mitigations

  • Rolling external assurance plan in place for each financial year focused on benefits realisation, change management approach and areas of potential risk of scope creep
  • Monthly financial review meetings
  • Quarterly benefits review
  • Benefits tracked and incorporated into five-year plan and reviewed every six months
  • Digital Maturity Model to support realisation of benefits to both internal and external stakeholders

Risk

Relevance and attractiveness of the accountancy profession

Key mitigations

  • Developing a consistent, compelling message around why accountancy presents a strong and viable career
  • Review of member value proposition
  • Demonstrating our sustainability credentials
  • Enhanced segmentation of, and research into, prospect groups to better define outreach