Management can fail to detect long term risks and, worse still, delude themselves into thinking that good times will continue indefinitely. These are mistakes we must avoid.

Shortly before the recent crisis in 2007 Prof. Greg Hackett published findings based on extensive research which showed that “The first and most important reason why companies fail is that they miss colossal external changes – undetected risks that risk the survivability of their business.”

Since the crisis, in 2009, Jim Collins published How the Mighty Fall  which suggests that there is a pattern to failure which he calls the “Arc of Tragedy”: Success leads to hubris, then, an undisciplined pursuit of more is followed by denial of risk or peril before grasping for salvation in panic and finally capitulation to irrelevance or death.

Even now there is a sense that the crisis is temporary and we will soon get back to business as normal. There has also been talk of a ‘new normal’ and ‘a realigned world’ after this crisis. These terms may be misleading because the world is unlikely to settle at a new equilibrium point for long. It will continue to change. Moreover, the pace of change will continue to accelerate.

Some forces of change are already evident. These include:

•  Globalisation, particular the shift towards the East as the engine of growth

•  Challenges to the power of national regulators in global markets

•  Changes in demographics with aging populations in some economies.

•  Rapid population growth and increasing demand on the Earth’s finite resources

•  Advances in technology and accelerating rates of take-up by consumers

•  Business models constantly threatened by change and new competitors

•  The increasing complexity and scale of global businesses.
 
Management accountants have a key role to play in helping management to recognise and address the risks and opportunities presented by change so as to ensure the sustainability of their organisation’s competitive position.

Together with CIMA, we management accountants must also be alert to how change could impact upon our own roles and prospects so as to future-proof our careers.

How do you see change impacting upon your role over the coming decade and what will you be doing to future proof your career? What can CIMA do to support you?