back to the main page

New IBM Study Reveals How the Best-Run Global Companies Reduce Risk

What are the keys to financial management success in the age of international markets and relentless competition? Two factors stand out among the world’s top companies—they're adept at managing risk and they're experts at integrating information throughout their enterprises.

Those are among the new findings of the Global CFO Study 2008, an IBM analysis of more than 1,200 companies. The research looked at the common financial management characteristics of what IBM coined the "integrated finance organizations," which refers to study participants with the highest compound annual growth rates over the last five years.

The four drivers of effective information integration are a corporate philosophy for global standards, an enterprisewide chart of accounts, standardized business processes across the organization, and common data definitions for gross margins and other financial metrics.

"We probed what were the drivers in successful financial management, and found that they were the components of good governance," says Stephen Rogers, financial management lead at the IBM Institute for Business Value.

Risk Avoidance

The study also found that organizations that most-effectively managed risk were those that best leveraged performance management tools. "These companies rely on predictive analytics and risk-adjusted forecasting and planning," Rogers says. "The firms essentially see risk as an input in their performance management tools, which gives them a focused way of looking at risk rather than trying to quantify every possible problem that might happen."

Although even the best-run companies can't completely eliminate risk, the top firms are three times less likely to be blindsided by it. "In both financial management and risk management, information is key," Rogers explains. "So these firms are able to navigate more clearly through problems when they arise."

For the full report, Please click here.

back to the top

Podcast:

PricewaterhouseCoopers and Oracle discuss governance, risk, and compliance best practices for segregation of duties management

Webcasts:

Listen to a Webcast by the Economist Intelligence Unit: Risky Business: Improving Governance, Risk, and Compliance in Financial Services

White Papers:

Sustainability Matters: Why—and How—Business Is Widening Its Focus to Consider the Needs of All Stakeholders