Certain types of people make sense of the world by looking at the opposite. Even if you aren’t that type of person a good analogy can go a long way.
Judging by the title I am going to make the point that there is more to risk than just making sure all of the door are locked on your accounts payable process. There is risk which is a situation involving exposure to danger. In the accounting world that would be things like people stealing money from the company. Then there is security which is the state of being free from dander or threat. Using the same idea in the accounting world security would be that it wasn’t possible for people to steal money from the company. It is no coincidence that the key word in both definitions is “danger”.
I could add “Will Robinson” to that title, but I am attempting to be all professional. Danger is something that accounting and finance people are all too aware of. The more I work with the profession (which I love) the more I find that in some situations the difference between being secure and not secure is an attitude a few people have in accounting.
So if security is not the opposite of risk, then what is? Well, that a very good question and I am so glad you ask. This is a difficult thing to write, because if I go with conventional wisdom, I shouldn’t even bring up this subject. There is no way to make your company 100% secure. It is an unrealistic goal. The problem with an unrealistic goal is it creates unrealistic consequences that have unrealistic planning and (worse) unrealistic process. The opposite of risk in accounting and finance is good process.
Because it is impossible to stop danger in accounting, which we know as having our money stolen, the best we can do is make it as difficult as possible. There are a few principles of good fraud reduction in play that you can leverage.
- Get rid of the paper – Paper causes paper problems and one of the biggest problem paper causes is the lack of tracking that paper has.
- Be on the update – Processes that are old get soft (as the young people would say) and when people get to know a process real well they get to know the holes in the process.
- The gangs all here – Dividing the critical processes that people can do between as many people as possible will create a more secure process. Think of it this way, what is more secure, two people holding critical processes or seven (it’s the seven by the way). The more the bad guys have to recruit the less likely they are to commit the crime.
It may not have as a glamorous ring to it but the opposite of risk in accounting and finance is not security but good process.
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About The Author:
Christopher Elmore has written 8 books, countless articles, lectures at UNC – Charlotte and travels around the country speaking on on the topics of startup success, sales, presentation skills, change, entrepreneurship, accounts payable and payment automation. Having deep startup and entrepreneurial experience, Christopher was one of the six people that startedAvidXchange in 2000 and continues to work in the business today. If you hire Christopher to speak or teach at your company or event… you won’t be sorry! Request a media kit or contact usfor more information.
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