1. What does the future hold? Further technological
innovation or disruption?
We are in a new world driven by technology. The ability
to use this technology in the right way and to analyse
the right information means that companies can know
what matters most, plan strategies and make decisions
based on validated facts. Data-driven decision making is
the future. Forward-thinking companies are beginning
to react to this disruptive technology and recognise
that anticipation of Emerging Issues and proactively
addressing them will help increase the lifespan of their
business.
- Marjella Alma
Within the financial services sector, technological
innovation (FinTech) continues to transform the
industry, disrupting every business segment in its path.
New players are emerging with more nimble, agile
services that operate service models which are more
in-sync with the aspirations of their target customers.
Increasingly technological capabilities enable firms to
analyse data, see patterns and predict behaviours with
far more accuracy, detail, consistency and precision
than ever before. We are now witnessing a new dawn
with the emergence of a new disruption, RegTech, the
combination of regulation and technology. Machine
learning and artificial intelligence will radically change
the way companies use analytical tools to analyse
and structure Big Data including for regulatory and
compliance reporting demands. Our ability to take
data and ultimately convert it into knowledge and clear
decision making has caught up. And so we needed to look
at our own traditional models differently. By exploiting
sophisticated technology backed up with experienced
risk management, we are changing the way companies
identify, assess, continuously monitor and mitigate
Emerging Issues.
The benefit of this approach is a fully integrated,
sustainable solution which will deliver strategic growth,
enhance reputation and mitigate risks facing a business.
- Andrew Bird
How are you embedding this convergence of data
and risk into companies?
In over 10 years at the Global Reporting Initiative,
working in the area of sustainability and ESG, I realised
that technology was the key to delivering genuinely
“insightful information” using the huge quantities of data
available. I believed that technology would be a game
changer and that, by manipulating this explosion of
available data into structured knowledge, it would both
inform and help companies make better decisions and
demonstrate how addressing emerging risks could be a
direct contributor to value creation. This has always been
my aspiration. eRevalue has built an analytics platform,
DatamaranTM
which extracts Big Data from a variety of
sources across all Emerging Issues. This combination of
machine-learning and artificial intelligence means real-
time identification of connections between various sets
of data. The ability to use analytical tools to identify gaps,
address trends and leverage Big Data in a meaningful
way improves monitoring of strategic issues, ensures
transparency across corporate reporting, mitigates
potential costs arising from non-compliance and overall,
improves company performance.
Our clients include globally recognized corporations
that have embedded the practice of using our radar
of Emerging Issues to protect and enhance their
performance.
- Marjella Alma
Looking at ‘risk management’ through the lens of ‘value
creation’ is a much more effective means of taking the
principles of sound business management to the heart
of the business. To achieve this, companies need the
reporting tools and analytical data at hand to provide
all stakeholders – from shareholder to regulator – with
the material focus and consistency of evidence that they
require. The controls around current environmental
issues and processes around management and reporting
can sometimes be ambiguous, often characterized by
what I call ‘peacock reporting’ – pages of overblown
information. Knowledge is key. We have a unique
offering, Crowe Risk, powered by DatamaranTM
, which
empowers stakeholders of any company (management,
shareholders, investors, employees, customers,
suppliers) to understand, visualise and manage these
issues, maximise opportunities and create tangible value.
It is taking the application of data and risk to new levels.
In effect, we help clients turn data into knowledge – and
that is immensely powerful. In most cases, it is a genuine
game changer.
- Andrew Bird
Andrew Bird, the MD of Crowe Horwath Risk Consulting UK and
Marjella Alma, the CEO of eRevalue explain Emerging Issues and how
a dramatic business response and game changing technology solution
creates value.
Emerging Issues – what is driving this agenda
and why do companies need to pay attention?
Understanding risks and issues should be an inherent
part of running any business successfully. Traditionally,
focus has tended to be on a narrow selection of risk types
and risk management is often isolated and segregated
from day-to-day operations. In my 30 years’ experience
in this area, the biggest challenge for any serious risk
function is to take it from ‘chore’ to ‘core’. This means
making management of Emerging Issues absolutely
fundamental to the way business gets done. Emerging
Issues – not only the risks to the business inherent
in its model and operations, but also the risks of the
business from an environmental and social perspective
– are increasingly subject to scrutiny and demands
for transparency. Such risks can no longer be swept
under the carpet. When done properly, being aware of
and efficiently managing Emerging Issues generates
competitive advantage and tangible value. The world
is changing at a pace we have never experienced before
and increasingly there is pressure to be more responsible
beyond the P&L. Markets are changing, workforces are
changing – and we believe that firms need to keep in step
with that change. Any firm falling behind now will find
that it will be difficult to regain lost ground.
- Andrew Bird
A study by the World Economic Forum shows more than
25% of a company’s market value is directly attributable
to its reputation. Historically, many companies chose not
to disclose the Emerging Issues which could influence
their reputation and harm their strategic growth. I ask
companies on a daily basis how they track, measure
and mitigate the impact of ESG risk and Emerging
Issues across their business. How do they decide what
represents responsible investment? Can they ensure full
transparency and accurate disclosure to regulators? How
do they benchmark the competitive landscape? These
are key questions that need to be answered before any
strategic decisions are made.
We have seen how quickly the changing landscape of
public opinion can have an immediate and lasting impact
on reputation and perception. Research shows that 90%
of consumers would boycott a company if they learned
of irresponsible or deceptive business practices (2015
Cone Communications/Ebiquity Global CSR Study).
71% of consumers said they would be willing to pay more
for a socially or environmentally responsible product;
62% of respondents would prefer to work for a socially
responsible company, even at lower salary levels. This
has an impact on the ability of a company to continue to
do business effectively.
- Marjella Alma
Why is it important to identify and ensure
Emerging Issues are on the radar of companies?
2017 will be the first reporting year for the EU Non-
Financial Reporting Directive (which requires companies
with >500 employees to report on non-financial
(Emerging Issues) performance and risks. This will
impact c.6,000 companies which have not voluntarily
reported to date. Inclusion of ESG and Emerging Issues
management and disclosure will become an imperative
for business. But how do companies recognise Emerging
Issues and their potential impact across all layers of their
business
We have identified 100+ Emerging Issues that can
impact the ability of companies to operate efficiently
in line with regulatory and legislative requirements
across geographies and sectors. Our list evolves as new
issues are identified with key headline issues of climate
change, executive compensation, board competence, IP
infringement, responsible procurement, human rights
and more. The value to be derived from addressing these
Issues can include greater efficiency, less waste, effective
reputation management, positive company ethos and
transparent governance. To minimize risk, real-time
quality analytics across Emerging Issues is crucial, as
well as the capability to address Issues as they arise.
- Marjella Alma
Andrew Bird & Marjella Alma
MD of Crowe Horwath
Understanding
risks and issues
should be an
inherent part of
running any
business
successfully
“
CEO of eRevalue
“
Crowe Risk, powered by DatamaranTM
is an innovative service brought to
you by a partnership between two
game-changing market leaders in their
fields. Crowe Horwath is a globally
renowned consulting, accounting and
risk management firm. eRevalue is a
leading technology, data analytics and
business intelligence provider driving
the use of Big Data techniques to
identify Emerging Issues. Together, our
pioneering approach to ESG analytics
and risk mitigation ensure Emerging
Issues are identified and addressed. The
initial focus of our partnership service
is to support Private Equity firms to
address the Emerging Issues inherent
in their business model and portfolio
scope.
Contact Details
Marjella Alma, eRevalue:
Email: marjella@erevalue.com
Andrew Bird, Crowe Risk Consulting UK:
Email: Andrew.bird@crowehorwath.com
The Game Changers
FINANCEMONTHLY 35
The Game Changers
34 www.finance-monthly.com