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January 24, 2013

Global business too sensitive to economic instability: CGMA

Global business is too sensitive to short-term economic instabilities, such as the USdebt crisis, global finance and business leaders warn.

The warning came as results of a global survey of finance and business leaderswho hold the Chartered Global Management Accountant (CGMA) designation.CGMA was jointly launched in late 2011 by the Chartered Institute of ManagementAccountants (CIMA) and the American Institute of CPAs (AICPA).

However, 27% of respondents disagreed about businesses sensitivity while 13% saidthey didn’t know.

The two professional bodies surveyed more than 1,300 members for their perspectiveson how economic crises affects long-term business planning with more than half(60%) saying their organisation needed to seek new ways to be resilient and lesssusceptible to macroeconomic volatility.

Less than half (40%) of respondents said while they felt these are issues for the riskregister it must not deter from investing in the future. When asked if their companiesneeded to be more risk averse 28% agreed they should and the same percentageagreed business model reinvention was the only source of sustainable value creation.

In terms of their company’s business strategy 42% said their organisation is focusingon balancing risk and innovation followed by 28% focusing on driving growth andinnovation, and 23% focusing mainly on risk.

While awaiting governmental decisions on spending cuts and borrowing limits, 43%of respondents said they would continue current business practices and ride out thestorm while 33% said they would delay hiring and 31% said they would be holdingcash and delaying capital investment.

CIMA chief executive Charles Tilley said "there will always be another US debtcrisis, Arab Spring or Eurozone disaster around the corner. This uncertainty simplycannot drive business strategy".

"These ‘grey swans,’ as some business commentators have termed them, areprompting organisations to cut spending and investment at a time when innovation isabsolutely vital to our economic health."

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American Institute of CPAs

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