In a period of uncertainty, the talents and skills of the world’s finance professionals are tested to the highest degree. Currently, we are in the most challenging economic period any of us have ever faced in our careers — yet it’s also the most invigorating. It is now that management accountants and other financial experts are called upon, not only to drive organisation through the downturn, but to ensure that companies have the right structures in place to ensure sustainable success in the long term.

To highlight some of the key challenges ahead, several professional management and accountancy bodies have produced a number of reports and guidance notes, which are designed to enable businesses to not just survive the downturn, but to thrive. The key themes of these reports cover the areas of strategy, risk, reporting and fraud.

As we know too well, a shrinking economy, poor trading conditions, disrupted markets and uncertain supply chains are all major threats to an organisation’s survival. Taking a structured approach to managing these factors and keeping an eye on the long-term strategy of an organisation are the only ways a business can make it through a recession.

At times of economic upheaval and low availability of finance, there’s a real danger that corporate strategy can be overshadowed by the instinct for survival. But in abandoning strategic thinking, not only do organisations run the risk of undermining their chances of advancing their business when the economy improves, they also endanger their ability to weather the storm. 

The answer to this problem is to address strategy in simple, relevant ways that keep management focused on the future success of their company — while delivering clear courses of action to survive turbulent times. Maintaining a strategic approach is critical. Research by Deloitte, compiled before most economies were officially in recession, found that 78% of companies were planning high-priority cost reduction programmes.

While many of these businesses had already factored cuts into existing strategic-change programmes as early as 2007, there is concern that more invasive cost-cutting decisions designed to deliver short-term benefits will harm the long-term competitiveness of the companies concerned.

The key to controlling a strategy that is under stress is discipline. At one level, this means looking clearly at strategic positioning, planning and execution, and then analysing how that long-term strategy can be maintained in a depressed economy. In other words, it’s about not panicking. A management team that is confident in its ability to make reasoned decisions will do a better job of securing the long-term future of their business, as well as their survival.

More immediately, it also means that companies still need to apply the traditional processes and disciplines for formulating and executing strategy in response to the recession. Common strategic failings — such as impulsive reactions to problems, across-the-board cost-cutting, failures of leadership, lack of clarity, misunderstanding of risk and ignorance of consequences — become even more damaging if they emerge in decision-making designed to ensure survival.