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Are You Recession-Proof?

January 24, 2008

I recently came across a very interesting statistic. CFOs were asked “What is it that is most likely to make you believe in the accuracy of data that you have requested?”

The biggest single factor turned out to be the speed of availability. If the answer came within an hour, they were 43% more likely to believe it.

In this era of ‘on-demand’ expectations, that should not perhaps be surprising. But at a time when a growing number of our community face demands to justify their headcount, their cost, their performance, it left me wondering how many of us are prepared. Could you meet that one hour response time?

As a manager, I longed for that hard, factual data that could raise my authority and ability to protect my organization. But I could rarely find it. If there were providers, they were too slow or too expensive (they didn’t pass the speed test!). So at IACCM, I was determiend to change that – to ensure we became a source of fast, accurate and low-cost information. How many heads should you have? What roles should they perform? Where might you add value? What should your cycle times be? How many reviews should take place?

I am pleased that IACCM today undertakes more thna 200 research projects  a year. On average, they are completed within 7 business days – and many are achieved in 2 or less. These provide information that enables our community to drive change as well as determine its relative positioning and effectiveness. But I am disappointed – and that is because so few of our community really make effective use of this on-demand service. When they get the call from the CFO, very few will be equipped to answer at all, let alone within an hour.

For a community that prides itself on risk management skills, it is quite remarkable that we are so careless with managing the risk to our own future and that of our department. Especially when it doesn’t have to be that way.

One IACCM corporate member faced the challenge this week – and was fortunate enough to be attending an IACCM breakfast meeting when they received the CFO’s note. Within 30 minutes, I had been able to provide her with a report on typical headcount in her industry and the variables that should be considered. But the data also helped her position ways that savings and efficiency improvements could be achieved – not by cuts in her department, but by expanding its role and activities.

Of course, I was pleased we could help – but that was just a matter of luck. The same presentation that quoted CFO data also had a great chart on world-class risk management. It said that top performers manage risk through headlights, not tail-lights. In other words, they anticipate the risks and prepare for them, rather than panicking when bad things have happened.

That’s the choice many function managers now face – prepare, or wait for the call and panic. 

IACCM has the information waiting, or the capability to gather it. If you are not recession-proof, then maybe you should be questioning the quality of your risk management! 

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