Global business is too sensitive to short-term economic instabilities, such as the US
debt crisis, global finance and business leaders warn.
The warning came as results of a global survey of finance and business leaders
who hold the Chartered Global Management Accountant (CGMA) designation.
CGMA was jointly launched in late 2011 by the Chartered Institute of Management
Accountants (CIMA) and the American Institute of CPAs (AICPA).
However, 27% of respondents disagreed about businesses sensitivity while 13% said
they didn’t know.
The two professional bodies surveyed more than 1,300 members for their perspectives
on 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 less
susceptible to macroeconomic volatility.
Less than half (40%) of respondents said while they felt these are issues for the risk
register it must not deter from investing in the future. When asked if their companies
needed to be more risk averse 28% agreed they should and the same percentage
agreed business model reinvention was the only source of sustainable value creation.
In terms of their company’s business strategy 42% said their organisation is focusing
on balancing risk and innovation followed by 28% focusing on driving growth and
innovation, and 23% focusing mainly on risk.
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While awaiting governmental decisions on spending cuts and borrowing limits, 43%
of respondents said they would continue current business practices and ride out the
storm while 33% said they would delay hiring and 31% said they would be holding
cash and delaying capital investment.
CIMA chief executive Charles Tilley said "there will always be another US debt
crisis, Arab Spring or Eurozone disaster around the corner. This uncertainty simply
cannot drive business strategy".
"These ‘grey swans,’ as some business commentators have termed them, are
prompting organisations to cut spending and investment at a time when innovation is
absolutely vital to our economic health."