Spaceships, Prince Charles and reporting truer business performance

  • The accountability of an organisation for its performance is limited by a narrow focus on its financial performance.
  • Developments in risk management and accounting provide a practical solution for measuring true performance using a mix of reward, risk and risk appetite.
  • Measuring true performance requires the measurement of both risk and reward across each stakeholder.

Spaceship hovering above ground with spotlight

When I started my career as a chartered accountant, it was instilled into me to assess financial performance using debits and credits as a basis to determine the performance and financial position of an organisation. I practised as an auditor for over a decade, helping to form an opinion as to whether the financial statements showed a ‘true and fair’ view of the organisation’s performance and financial position.

During this time, a few things always bothered me:

  1. What is performance? As accountants, we were solely worried about the financial performance but what about the non-financial performance?
  2. The performance we show as accountants is an historical record of the ‘to date’ financial impact of past decisions. We do not show the true impact of decisions that have been made as to how they are expected to affect future time periods.
  3. In addition to the expected future impact of past decisions, what about the degree of uncertainty there is around the expected impact, that is, risk?

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