Last updated on January 16th, 2023
Risk management strategy is aimed at keeping the losses to a minimum during the occurrence of any unfortunate event. As a businessman, implementing a dedicated strategy for the accounting department is a necessity simply because certain eventualities are beyond anyone’s control and accounting operations are generally indispensable.
In the recent years, the dependency of accounting on technology has escalated rapidly, to great heights. From tracking of transactions to authenticated auditing, almost every accounting task requires less human involvement due to growing aids from the numerous IT solutions available nowadays.
Therefore, borrowing a risk management strategy from modern IT technology can be a fitting and reliable solution. Cloud computing, which is controlling most of the business operations today, is aggressively providing solutions for various IT needs and has the potential of being a fail-safe backup plan in case of any disruption in local services.
Risks that Accountants Should Be Wary Of
Accounting professionals do not rely on mere statements and often require factual backing to make their decisions. To analyze the reasons that make the cloud, the first choice of risk management strategy for accounting professionals, let’s first consider the accountant-specific risks that can hamper your business performance.
1. Data Loss or Theft
Technical glitches, nefarious minds, accidental deletions, etc. are some of the reasons that can cause loss of entire data of an accountant within seconds. And what could be worse than losing client’s accounting data is theft or letting an unwanted party gain access to it.
Such situations can easily turn into a dead-end. Manually performed data backup is a solution that most users prefer in this case. However, the time spent on it will be hampering performance in a big way.
DATA SOURCE: Data Health Check 2015 | Databarracks
2. Device Disruption
You can again blame technical glitches for this. Apart from that, there is the possibility of any unfortunate turn of events (natural or man-made) that may damage the local device. In such cases, not only is the data lost, but the entire working ability of the accountant is disrupted.
3. Structural Restriction
There are a number of reasons for which an accountant collaborates with clients, assistant, colleagues, interns, etc. Most of them rely on a well-defined structural network to work with different users. With time, when the existing users leave and the new users join in, the network may get stuck in a snag which will also affect the accountant’s operating abilities.
4. Wrong Communication With the Client
Clear and efficient communication with the client is an irreplaceable requisite for professional success. As an accountant, wrong communication with the client can lead to extreme consequences for the client’s business, which may eventually lead to similar consequences for the accountant as well.
5. Technologies Turning Outdated
It is probably as certain as death! Machines, software, networking topology, and all other technical solutions that an accountant is relying on is going to be outdated someday. Such situations will not only lower your performance but may also make clients switch to someone else.
6. Missing Deadlines and Target
Time is swift during the tax season; deadlines arrive faster than what it seemed when accountant picked a project. Moreover, meeting the promised tax saving target is an additional stress. All this could lead to mayhem at the accountant’s end. Not living up to the words, is one of the main reasons why clients leave CPAs.
How Cloud Is Important In Risk Management For Accountants
1. Data Protection
Choose a reliable cloud hosting provider, where your data is backed up and mirrored safely so that you can always have the data available all the time. Talking of data protection, encryption is one of the most trusted ways to keep the data safe from theft.
Other security measures such as – hardware firewalls, TFA, threat detection systems, threat protection systems, etc. deployed by the hosting providers construct a safe data storage environment for accounting professionals.
2. Device Independence
Cloud operations are independent of the local device. Accessibility on the cloud is established using an internet connection and secure login credentials. This means even if the accountant’s workstation has turned to ashes, they can still access the data and application from any other internet connected device, irrespective of its portability, OS, and other such factors.
So, the cloud not only gifts accountants with device independence but also lets them work from anywhere with a laptop or a smartphone i.e. the accountant can keep on working even when the IT infrastructure has taken a beating.
3. Flexible and Adjustable Structure
Hardware independence, as mentioned above, allows different users to work from a virtual location and without being physically present at the office. It also facilitates the different users (like – clients, accountants, assistants, etc.) to work together on the same accounting file from different locations, simultaneously.
Depending on the choice of application and hosting provider, one can add any number of users. There is no geographical restriction. Plus, access permissions to sensitive data on the cloud can be edited with just a few clicks. All in all, cloud accounting ensures that you have a flexible setup that can be adjusted at will.
4. Better Collaboration With Client
Unlike the traditional file sharing methods where numerous email exchanges take place, the cloud lets client and accountant work on the same platform simultaneously, with the ability to track and retract any changes made. So the complications of file-sharing are well handled and confusions with multiple versions of the same file are eliminated.
Along with the real-time collaboration, you can get unified communication solutions to communicate while working. All this escalates the client-accountant communication to a whole new level.
5. Latest Technology – Always
Cloud services update automatically without any noticeable disruption in services. Moreover, since there is no hardware restriction, you can easily change the resources (server OS, RAM, etc.), which means ‘outdated technology’ does not exist at all.
Given that 90% of all business have “cloud first” strategy, the cloud is set to take the center-stage in the coming time and stats are almost similar with the accounting apps. Being on the cloud is your best bet to remain in sync with the latest technology trends.
6. Better Scheduling & Assigning Tasks
Accounting applications on the cloud are easier to integrate with other task management applications, such as – CRMs, ERPs, task schedulers, reminders, etc. Moreover, it offers updated reports to keep a track on the resource performance.
This convenience, added with the feasibility of working from anywhere and anytime, scales up the chances of growing on the performance metrics and meeting the set targets easily. Eventually, the accountant is able to deliver what they promised to the client and maintain a better client retention rate.
It’s almost impossible to get rid of almost every challenge and risk in one go. But, by deploying some smart solutions you can mitigate them considerably. Cloud computing is certainly a dependable solution for the accounting professionals in many ways, as mentioned above.
Loss of local infrastructure and software glitches are the top risks that can bring down operations at the accountant’s end. Cloud Computing is able to overcome these issues and reinstate operations within minutes or even seconds.
All these benefits come without any compromise on the performance, which makes the cloud a definite favorite for risk management strategy.
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