Even when a practice has an established risk management framework in place, you need to think ahead for how to manage unpredictability and failure.
“Areas considered higher risk in the accounting industry are advising on mergers, acquisitions, auditing, insolvency, business valuation and corporate advisory work,” says Sharon Quennell, Aon Australia’s client director of professional practice.
“When things go badly in these areas of practice, they typically come attached with high financial consequences.”
Quennell leads Aon Australia’s offering to professional service associations and helps clients stay ahead of the curve by providing timely solutions relevant to their profession.
She points out that pricing accountancy risk has been a highly competitive environment over the past decade, driven by strong insurer appetite to write this class of business.
However, 18 months ago, prices started rising and Quennell believes we’ll see continued pressure on pricing and changing risk appetite from insurers.
Picture: Sharon Quennell, Aon Australia’s client director of professional practice.
Facing a new risk environment
With the COVID-19 pandemic affecting the future of work, she warns that accountants should be aware of “the rapidity of change [we’re seeing]” but also “the relevance of information available, and access to the right people to advise on how you should act”.
As businesses face increased uncertainty with cash flow, advisory activities such as auditing, making projections or forecasting and best practices for layoffs, stand-downs and redundancies become enhanced risks.
Quennell says that investing in professional indemnity (PI) cover and third-party advice can help you review and implement better risk strategies. PI insurance can offer a safety net in protecting your business against third-party or client claims for economic loss, negligent advice or misleading conduct.
So how should businesses navigate this new risk landscape? Quennell offers the following tips:
1. Don’t neglect your administrative processes
With the majority of businesses activities – including your own practice – being conducted online, it’s worth reviewing your existing operational systems and processes to test them for effectiveness with the move to operating in a digital environment.
“This includes reducing errors in incorrectly lodged documents such as basic tax returns,” says Quennell. She points out that while these may not be high value claims, they do tend to be high volume.
2. Get additional help and clarity as needed
All practising accountants are required to hold PI in some capacity. However, Quennell advises defining what your specific scope of practice is, as supported by your industry association and the industry you work in.
“If you are a chartered accountant and hold a PI policy arranged by Aon, you can access a legal helpline with two hours of complimentary legal advice on any matter related to the risk insured by the policy,” Quennell says.
Lawyers can advise on the best course of action to take, navigate privacy issues or any other liabilities related to professional advice or your services.
3. Seek a global perspective even when operating locally
Forming a relationship with a third-party adviser for insurance cover allows accountants to access additional resources, withstand external pressures and pivot quickly.
“Often a client can’t think of everything themselves,” says Quennell. “Meanwhile, we’re on the front foot, communicating with our team globally and identifying what our clients need to be looking out for. Establishing that relationship and helping clients stay two steps ahead matters to us.”
“Helping clients stay two steps ahead matters to us.”
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Find out more:
Aon helps businesses manage risk and arrange insurance cover. Find out more about the insurance available for chartered accountants aon.com.au/ca and access COVID-19 resources at aon.com/event-response/coronavirus.aspx
© 2020 Aon Risk Services Australia Limited ABN 17 000 434 720 AFSL no. 241141 (Aon).
The information provided in this document is current as at the date of publication and subject to any qualifications expressed. This information is intended to provide general insurance related information only. It is not intended to be comprehensive and it must not (under any circumstances) be construed as constituting legal advice in whole or in part. You should seek independent legal or other professional advice before acting or relying on any of the content of this information. Aon will not be responsible for any loss, damage, cost or expense you or anyone else incurs in reliance on or use of any information contained in this document.