Tag Archive for: Business management

Risk management is about more than avoiding bad things

Effective risk management is more important now than ever. It is more than a tick box and needs to continually evolve.

Risk has moved more sharply into focus in the organisational psyche. Objective risk analysis and management has changed through the efforts of many professionals, including accountants, and has influenced how we perceive, frame and oversee risk in the boardroom.

Building a risk management culture

Risk management is a matter of culture, rather than rules and regulations. It requires leadership and needs to be approached with a mindset of “achieving business objectives”, rather than “avoiding bad things”. Strong risk cultures share certain traits: they acknowledge risk (as threats and opportunities), discuss risk internally, and encourage transparency. The best cultures actively seek information and insights. A healthy culture – along with strong governance and effective management – creates true safeguards as many risks result from human behaviour.

Financial crises and scandals have underlined how easily weak controls can lead to misconduct, corruption and criminal practices. Risk management failure is widely regarded as one of the major contributors to the 2008 global financial crisis. Failures like these wreak financial and reputational damage on organisations and the wider community.

The good news is that the current environment of uncertainty caused by the global pandemic has led many leaders to rethink organisational priorities. Risk is now front-of-mind for boards. Those charged with governance must make time to reflect on risk management practices to ensure they are fit for purpose. Lessons should be used to reshape risk management as a tool to help organisations “thrive” rather than simply “survive”. Boards aiming to achieve more than their standard oversight obligations must dig deeper. They must assess the quality of their risk management as the cornerstone of their value-add as directors.

It all starts with the board’s risk appetite. Culture, processes and structures must take advantage of potential opportunities while managing potential threats. Boards must set the risk appetite of the organisation and then ensure an adequate framework is in place to identify, manage and monitor risks. Defining and documenting risk appetite supports the development of a good risk culture. It must be aligned to and support the purpose of the organisation.

Designing an effective framework

 

Boards should consider if the organisation needs to invest in technology-based tools to oversee and report on risks. Larger organisations might also establish a risk management committee. This can be an effective way to deliver the transparency, focus and independent judgement needed to oversee the organisation’s risk management framework. If a committee isn’t already in place, boards should assess the potential benefits of one.

Establishing an internal audit function is also an important consideration in an effective risk management framework. Internal audit can provide valuable assurance that key risk mitigation strategies, including internal controls, are operating effectively. A forward-looking internal audit can also provide insights into how to improve the effectiveness of the organisation’s risk management framework and improve overall performance.

Organisations with a clear line of sight over emerging issues – from board level down – have fared better during the early stages of the pandemic. While many risks are external to an organisation and often out of its control, there are important decisions to be made on exactly how risk is managed and how responses are communicated. A cohesive, integrated approach is crucial to ensure responsibilities and accountabilities are clearly defined and understood.

Well-designed risk management frameworks and governance can reduce operational losses, build stakeholder confidence, and help organisations to achieve long-term strategic and financial goals. The effective design and implementation of a fit-for-purpose framework and appropriate governance structure can be harder than it sounds but engaging independent expertise can assist. Contact a Synectic adviser to discuss how we can support you.

Need some help?

Claire Smith - Senior Consultant Tasmania
Claire Smith FCPA
Senior Consultant

 

Claire Smith is a senior executive and accountant with almost 20 years’ experience across the private and public sectors, including an extensive background in risk management. She is also an independent member of the Department of Treasury and Finance Audit & Risk Management Committee.

Contact Claire or any of our Synectic advisers to discuss how we can support you.

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Director identification numbers

The director identification number (DIN or director ID) system commenced on 1 November 2021. All directors need to apply for a DIN and existing directors should start preparing their applications now.

DIN is the first service to be delivered by the new Australia Business Registry Services (ABRS). ABRS is a new platform which (between now and 2024) will bring together multiple registers from Australian Securities and Investments Commission (ASIC), Business Names Register, the ATO and Australian Business Register (ABR). ABRS and your DIN will streamline all these registers, by allowing you to manage your details in one place, with a single identification number. The aim is to improve consistency and efficiency, cutting back administration time and ensuring all your records are updated within required time frames.

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Keeping a vehicle log book

When claiming work-related car expenses, many people miss maximising their claim due to poor record keeping. Inadequate records can also cost dearly if you are audited by the Australian Tax Office (ATO).

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5 tips to avoid FBT on your staff Christmas gifts and work party

Christmas will be here in a moment and many employers will be thinking about recognising their team’s efforts throughout the year. You may already have plans in place, but have you thought about how to manage tax and Christmas gift giving?

Feel free to celebrate, but make sure you don’t get stung with unexpected taxes. Fringe benefit tax (FBT) and associated income tax and GST pitfalls are the big ones to watch out for.

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JobKeeper extension

The JobKeeper scheme has been extended from 28 September 2020 until 28 March 2021. The extension applies over two separate extension periods:

  • Extension 1: from 28 September 2020 to 3 January 2021
  • Extension 2: from 4 January 2021 to 28 March 2021

For each extension period, an additional actual decline in turnover test applies and the rate of the JobKeeper payment is different.

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Important Updates to Job Keeper 1.0 & 2.0

Changes to JobKeeper eligibility rules, announced on 14th August, mean we now need to revisit JobKeeper 1.0 to ensure your business stays eligible and to maximise your JobKeeper entitlements. Indeed, the changes may result in increased JobKeeper 1.0 payments for some businesses.

The government has also announced a relaxation of eligibility criteria for JobKeeper 2.0.

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COVID-19 Important Updates

As we continue to adapt to life with the coronavirus, the one certainty is how rapidly things can change, and predicting how the next six months unfolds would be anyone’s guess. Despite the uncertainty, both Federal and State governments continue to do all they can to assist businesses and the economy to respond accordingly.

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Important JobKeeper Updates

The ATO continues to roll out much-needed details about JobKeeper Payments, allowing us to advise clients with increasing clarity. Recent information has served to broaden eligibility for some businesses and extend deadlines, opening pathways for more businesses to potentially benefit from the subsidy.

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JobKeeper – Important Updates

The roll-out of the JobKeeper program continues at a rapid pace. Is your business ready for the JobKeeper Subsidy?

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COVID-19 JobKeeper Payment update

The JobKeeper Payment, at $130B, is the single biggest economic support measure in Australia’s history. The more we hear and read, the more confident we are that this measure has definitely hit the mark and will be the saviour for many businesses and thousands of jobs.

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