09 October 2003

If you can't stand the risk...

If you can't stand the risk

by Maurice H. Hartigan II,
President and CEO - Risk Management Asssociation

With greater consensus that the world is several decades into global warming, we should all be used to 'feeling the heat,' although the heat we're feeling is being brought to us by Mother Nature and our regulators. And after years of sweating through mergers and consolidations and trying to do more with less, I guess it should come as no surprise that we've shrunk liability to a four-letter word.

As risk managers, we look at various risk/reward equations and decide when to forgo the reward to avoid a major burn. Managements at many smaller accounting firms, acting in a similar manner, are dropping their public corporate clients like hot potatoes to avoid registering with the Public Company Accounting Oversight Board and preparing for intense scrutiny and possible harsh discipline for red flags they didn't see while performing audits.

Some, mostly larger, firms have chosen to stand the heat and are sinking resources into ensuring they meet the new rules. Others are waiting it out a bit to see where the dust settles. The implication for risk managers is profound if the result of this uncertainty is that their clients are unable to produce audited statements. "

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