Tax & Accounting Blog

On Compliance – what does good risk management look like?

Accountancy Practices, Accounting, Compliance August 29, 2018

This month’s pun-tastic podcast focuses on a topic relevant to business owners across every sector. Risk management is particularly significant to accountants due to compliance issues such as MTD and GDPR. AccountingWEB ask two top UK accountants how they have effectively implemented risk management strategies within their practices. Lucy Cohen, co-founder of Mazuma Accountants and Olly Evans, Director of Evans and Partners, discuss the matter in-depth with Richard Hattersley. Lucy’s dog was also present at the recording; hope a risk assessment was carried out…

Lucy kicks off the session by explaining why a suitable strategy is necessary: “Being able to plan for and manage risk is really crucial because without it, we can get real bottle-necks in the process which has an impact on the financial risk of it all”. She outlines some of the key risk areas of the business to be; data breaches, client communication, spam emails and relates a recent attack on her businesses web domain. Lucy reminds us that even though we may have a contingency plan for certain situations, we can’t predict them all – risks we haven’t even considered can become apparent very quickly.

Throughout the podcast, Olly and Lucy give their learnings from past experiences and give their recommendations. . By continuously assessing your practice’s strengths and weaknesses, and by identifying the biggest threats, the pair suggest that you are more likely to be successful in negating risk. Lucy says: “you can guarantee that as soon as you’ve thought of a potential weakness in your system, somebody out there will have thought of it as well”, reinforcing the of the importance of keeping your process up-to-date.

When asked about the best way to get the entire practice involved in reducing risk, Olly refers to awareness and education of staff, and challenging our existing curiosities which may expose us to risk: “If someone finds a memory stick in the car park, the natural thinking is well I’ll go and plug it in to a machine and see who’s it is, but actually, is that safe?”. Lucy encourages us to not make risk a taboo subject, but to make it part of your company’s culture. Mazuma has “a very open conversation policy… if they think there is something we can do to improve, they can come forward and tell us”. She suggests this as the best way of evolving your risk strategy as the risks themselves change over time.  

When it comes to the initial phase of implementing your risk strategy, Lucy recommends the simple task of finding a member of staff who is particularly resistant to change and involving them in the process. Although they often pose a problem, she suggests they could be just the person to get a water tight risk management process in place: “Get someone who hates change as they will throw up every reason that a new process could go wrong”.

On a more positive note, could risk represent an opportunity for accountants? When it comes to data security, it’s generally assumed that accountants are on the ball as it’s part of their everyday role. Olly says “I think as a profession we all face similar risks…just being aware of them planning ahead means you have an advantage over someone who perhaps doesn’t.” Olly concludes by saying “sometimes managing risk is about implementing a solution which is cost effective, rather than the least risky – you have to balance the two in business”.

They also touch upon risk as part of marketing, recruitment and the small matter of Brexit. Opportunities where risk management will be at the forefront of accountant’s minds in the future are also up for discussion.

Listen to the conversation in full by clicking the arrow below:

If you found this podcast useful, you might also enjoy hearing about recent FRS 105 updates.

Want more up-to-date insight on the main compliance issues facing UK accountants? Receive these monthly recordings directly to your inbox by subscribing to the On Compliance podcast series.