Mastering uncertainty: protecting your business from modern risks

Interview paperjam.lu from 16.12.2024

Today, all businesses and organizations face a growing number of risks that could compromise their operations. These dangers are increasingly numerous, often unexpected, and carry ever-greater consequences. We discussed this topic with Patrick Terazzi and Jan Brosius, respectively Partner Audit and Partner Accounting and Corporate Services at BDO.

 

Increased and diversified threats

At the top of the list are, unsurprisingly, cyberattack risks. With the massive digitization of processes, cybersecurity threats have grown exponentially. The rise of AI, the next chapter of digitalization, will also introduce new challenges and risks that businesses must anticipate. Cybercriminals still primarily target money, making payment fraud the most common threat.

Beyond these recent technological risks, traditional operational risks remain. These stem from financial crises or geopolitical upheavals that can disrupt business activities. Additionally, regulatory requirements, while designed to prevent certain pitfalls, impose an administrative burden that is often difficult to manage. This is particularly true for medium-sized businesses, which are both highly exposed and lack the financial and human resources to address these challenges.

Best practices

To face these risks, solid responses and relevant solutions do exist. The first step is for leaders to acknowledge their vulnerabilities. Recognizing potential weaknesses is the starting point for establishing effective protection. Next, governance must implement a robust control environment, supported by a strategy of reinforcement and regular, in-depth audits. These audits should include financial, technological, and regulatory controls.

The backup philosophy must also prevail: systematically integrating alternative solutions or contingency plans for every process. By anticipating risks through multiple lines of defense, businesses can minimize potential damage. Finally, ongoing monitoring is essential to measure the effectiveness of these measures. However, these processes are often costly, which is why they remain underdeveloped in many companies.

An innovative solution: Governance Healthcheck

To support clients in addressing these challenges, BDO offers the Governance Healthcheck service. This solution combines the firm’s expertise and experience with proven security processes. Governance Healthcheck engages verification processes at multiple levels—financial, IT, or HR, for example—to deliver a comprehensive diagnosis of key functions' security. For businesses, this is an opportunity to assess their current infrastructure's strength and identify areas for further improvement.

Designed for occasional use, this tool complements existing internal control systems, which include the critical work of internal auditors. To that end, BDO also provides support services to assist businesses with day-to-day operations. Once again, anticipation remains the key concept that companies must embrace to navigate modern uncertainties effectively.