How Unit4 FP&A can improve financial risk management

Managing the unpredictable

There is also risk involved in the unpredictable. It’s easier to assess risk in something you know will happen, a merger or acquisition for example, but something like the pandemic is a prescient example of risk in the unpredictable.

Notably, those who had the agility and flexibility to manage the risks with agility, as they occurred, had the most success and resilience in this period thanks to world-class FP&A techniques. The knowledge and experience of your people working in other functions are invaluable for a comprehensive evaluation of potential impacts.

For risk management to operate in anticipation of risk and change, collaboration is key. Operational teams, or those working in demand planning, must compare data and identify anomalies, as must different functional departments like HR, Finances, Sales, Projects, and Procurement.

While it’s tough to recommend how organizations should operate when unpredictable changes occur, there are some best practices for recognizing and responding to the new reality:

• Monitor the external environment, identify new trends and innovations with a focus on the changes that those bring
• Determine the significance that identified change, or innovation has on the company and its key stakeholders
• Depending on the level of significance, identify and prioritize what the company should and could do differently in response to those changes
• Define the action plan, including the roles and responsibilities of the individuals
• Implement the action plan
• Monitor the execution of the action plan
• Measure the performance of the outcomes
• Share the update on the progress with relevant parties
• Take corrective actions if needed
• In parallel, continue monitoring external developments and repeating the process