As businesses face an increasingly unpredictable world, the role of an accountant extends beyond tracking the numbers. When disaster strikes (such as a cyber attack or destructive weather event), accountants play a crucial role in getting company finances back on track.
This article explores the vital role of accountants in disaster recovery and crisis management. Discover how they help organisations optimise cash flow during setbacks and navigate the complexities of post-disaster financial management. Read on to learn more.
Financial Assessment: The First Crucial Step in Disaster Recovery
Immediately following a serious incident, accountants must accurately assess the financial impact on the organisation. This involves quantifying the monetary value of damaged assets, lost inventory, and operational disruptions.
According to estimates from IBM, the average cost of a cyber security attack has risen by 10% in one year to USD 4.88 million. Businesses can also lose an average of USD 45 million in the wake of a natural disaster.
Gathering all of the company’s financial records and tax returns (ensuring there are backups before disaster strikes) helps accountants get a crystal clear picture of the organisation’s financial circumstances. This, in turn, helps business leaders make informed decisions about their disaster recovery strategies or close the business entirely if it is no longer viable.
Insurance Claim and Financial Management: Maximising Disaster Recovery Funds
Navigating the complex world of insurance claims is crucial to disaster recovery. Submit relevant documents, work with insurers to ensure fair assessments, and help the company understand the tax implications of claims payout.
Contacting government agencies offering aid may also provide crucial financial assistance at this critical juncture.
While businesses wait for their settlement, accountants may also be asked to help find an alternative, safe working location for the recovery interim period. Similarly, accountants can help businesses reduce their operating costs, explore alternative revenue streams, negotiate with creditors, or restructure the business to aid crisis management.
Data Recovery and Developing Crisis Management Plans for the Future
Whether the organisation is facing a cyber attack or outright destruction of IT hardware, accounting teams must help organisations implement backup systems for financial data. They can also develop protocols for quick data recovery in case of another system failure.
Developing contingency budgets for various crisis management scenarios also helps businesses prepare for potential crises and contributes to the long-term resilience of an organisation.
Additionally, they will be tasked with complying with reporting requirements regarding disaster-related expenses. This will not only help businesses remain compliant but also help them maximise available support to speed up business recovery.
INAA: Exploring the Indispensable Role of Accountants
Joining the INAA’s global network of accounting and auditing professionals puts you one step ahead of industry developments. It helps you deliver an outstanding service, even if your clients face extraordinary financial challenges.
Take a look at our member benefits page to learn more about the events, resources and networking opportunities we offer, and sign up here to become an INAA member today.