That was the topic running through many of yesterday’s Davos debates.
It was investors who most talked of the risks: The Carlyle Group identifying so-called ‘black swans’ or unanticipated risks such as a new global health pandemic; M&G Investments warned of the possibility of a devastating worldwide IT crash.
The Barclays CEO Jes Staley actually said that this year’s Forum “feels a little bit like 2006.” But the banks lined up to say how they had now reformed themselves, and the debate was that this time the risks are extra-financial rather than financial.
Staley referred to how connectivity and collaboration between regulators, banks and other stakeholders was crucial to avoiding another crisis.
Of course it is this connectivity which is at the heart of what integrated reporting is trying to achieve – not just for the financial world, but for all business and all its impacts.
This was expressed for us a little more poetically than I might have ventured by ‘King of Bollywood’ Shah Rukh Khan, who accepted the WEF’s ‘Crystal Award’ in the main auditorium saying, “We are in a world where so many are categorized and Davos shows us that we need to connect with people in order to heal the fractures in the world.”
It was a very Indian-led day with the country’s Prime Minister opening the Forum, including a very stark warning of the dangers of global warming.
Last year China emerged as the champion of free trade, yesterday India was the very harbinger of climate change.
How things are changing, indeed.
This should not just be taken just as an issue of geopolitics and of a new world order, but that the forces of globalisation remain very strong.
The WEF addressed that very question through conscious self-parody, titling a separate session saying that ‘globalisation has to be saved from itself’.
The two themes of connectivity and risk came together in a WEF meeting on new guidance on integrated risk management which is strongly endorsed by the IIRC, and has been brilliantly led by our partners in the World Business Council for Sustainable Development.
It’s Chief Executive and IIRC Vice-Chair Peter Bakker called for us to continue down the path to fully integrate non-financial with financial reporting, saying it is actually developing a ‘new language’.
The accountancy profession has played a major role developing the new guidance, launched by the Institute of Management Accountants representative on COSO Sandra Richtermeyer and with a major input from EY Partner Brendan Le Blanc (another veteran of integrated reporting).
Yesterday saw further profile for the profession as participants digested findings from the PwC annual CEO survey, preferring the term ‘anxious optimism’ to the ‘cautious optimism’ which I described in my blog yesterday.
But the key finding for the IIRC and all involved in corporate reporting was a further very strong indication that financial metrics alone are not a sufficient measure, with two-thirds of CEOs saying measurement should be undertaken through multi-faceted metrics.
The multi-capital view of the world was also underlined by climate change being recorded in the survey as one of the top ten threats to business, but perceived as less important than the challenges of people and of technology.
But as the film star said, in the end, they are all connected.
Richard Howitt is Chief Executive Officer of the International Integrated Reporting Council (IIRC) and will blog daily from Davos 2018 for the International Accounting Bulletin and The Accountant.