It has been about two weeks since my last post, so apologies to anyone who follows my updates. Long story short is that I am in process of setting up new website, IFRSriskmanager, and that has been eating up some time and brain cells. I also did not want to have to import a large amount of older content, but I think I have worked out how to avoid that issue. Now that that is behind me, I promise I’ll keep updates on a timely basis as we go forward.
An Analytical Framework
As NorthPoint looked at the market for risk management approaches and software tools which can help companies assess and mitigate IFRS conversion risks, we thought it would be helpful to develop a way to categorize the various approaches or tools that exist.
Our research indicated that the market for IFRS risk assessment and mitigation approaches and for software tools could be broken out in a matrix as illustrated below. Please understand that the tools and approaches in the market vary greatly and their respective differences are difficult to describe in a simple matrix. Regardless, we felt that a simple analytical framework provides a way to understand what is available and to assess the tool or approach most appropriate for what your company is trying to accomplish.
On the horizontal axis, the time orientation of the approaches and tools ranges from those that support a “snapshot” or risk assessment at a specific point in time, through to those that help to predict or forecast outcomes given accurate program plans and the application of tools by skilled and experienced professionals.
The vertical axis indicates the analytical orientation of the tools and approaches. The analytical aspects range from providing a diagnostic view i.e. “what are the issues you must manage”, to a more prescriptive view i.e. “what should you do about those issues”.
The point behind the framework is to help understand and categorize what type of approach or tool your company needs or is being offered by service providers.
For example, dependent upon where your company is in the IFRS conversion program lifecycle, it may be very appropriate to obtain a “snapshot” in order to help get the rest of the organization on board with the major issues to be faced. Until the SEC decides upon an IFRS conversion deadline, many companies in the US are doing exactly that to help build understanding of the dimension of the issues within their organizations.
Alternatively, if your company has started down the IFRS conversion program path and there is a requirement to ensure that risks will not impact schedule or budget, your service provider or program team will need to be both predictive and presciptive in terms of what must be done to maintan time and schedule integrity.
In my next post, I’ll start to fill in the blanks of the framework and provide some examples of tools and approaches available in the market today.
Tags: IFRS, IFRS conversion, IFRS conversion risk management, IFRS risk management, IFRS risk management software
