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Identify potential reporting risks and contribute to develop a mitigation strategy

The program “Financial reporting risk (Swiss Re)” will get you there

Moving from 'Learning' to solving a 'Real Business Issue'

Focus on solving a business issue

Learning returns the highest benefit when it is properly applied to solving real business problems. We recommend the line manager and the employee agree on measurable goals that will address known business issues.

The employee might then need to attend a development program such as this workshop. The objective is not just to attend a workshop, but rather to increase the employee’s business and financial acumen, and as a direct result of this development program, identify and help achieve specific, measurable, value-creating performance goals. To illustrate moving from learning-related goals to performance-related goals, we have prepared the following suggestions, which of course should be modified to meet the specific needs of the line manager and employee.

A business issue is on the table
Manager asks employee to solve the business issue
Training takes place with the issue in mind
Employee focuses on solving the issue
Employee reports outcome

  • Issue needs to be solved asap
  • Employee is unclear how to do that
  • Definition of KPIs to solve the issue
  • Training will be recommended to help solve the issue
  • Maybe a workshop
  • Maybe on-line
  • Employee addresses the issue with the newly acquainted knowledge
  • Employee shares how it was possible to meet the KPIs
  • Issue is solved

Value creating performance

Value-Creating Goal

Based on insights from this workshop, participants should be able to identify relevant financial reporting risks (USGAAP/EVM) and recommend ways to manage them.

Suggested application tasks in order to meet the above-mentioned goal

  • Consult the process documentation in your area
  • Consult the Risk and Controls Self Assessment (RCSA) in your area
  • Identify potential reporting risks / control gaps
  • Suggest mitigating actions (self raised issues, control improvements)
  • Consult ORM and/or Finance Governance to implement mitigating actions

Summary

Addressing business issues - in a context of learning - promises to produce impressive ROIs.

When we consider all the benefits and costs, this type of training/development investment creates significant value and provides impressive quantifiable returns, both for the employee and for Swiss Re. Therefore, this approach moves us far beyond "just learning something"; it focuses us on the positive business outcomes by quantifying the expected costs and resulting value creation.

Our Thoughts – the Return on Investment (ROI) Calculation

This activity promises a strong ROI of 255%

The sections below reveal our calculation.

Select each thought (+) to learn more about it.

Quantifiable value: Assume as a result of this workshop, each participant identifies and cures two risk mitigation deficiencies where risk can be properly managed and mitigated instead of a control failure that would occur.

Assume remediation of the reportable control failure (versus non-reportable) requires 12 total hours work for the control owner and the line manager. Assuming 1 of the 2 identified control failures is reportable, the total time savings resulting from avoiding the reportable control failure would be US$2,040 (12 hours at an average cost of US$170 per hour).

Further assume remediation of the non-reportable control failure (versus reportable) requires 3 total hours of work for the control owner and the line manager. Assuming 1 of the 2 identified reporting errors is non-reportable, the total time savings would be US$1,020 (6 hours at an average cost of US$170 per hour). Combining the above yearly savings for each participant produces an annual savings of US$3,060 (US$2,040 + US$1,020).

Non-quantifiable value: Besides these measurable values, there are also non-quantitative benefits of this workshop. These include for example reduced auditing exposure and better governance, as well as the enhancement of work quality, all of which materializes over time. Although not included in the ROI calculation below, the other important, and often neglected impact, is that of reputational damage, caused for instance from material misstatements of the financials which could exceed US$10 million. The assumed value per avoided item is 0.1%, therefore the imputed value each avoided item could be in excess of US$10,000 (US$10 million x 0.1%).

Assume the cost of participating in the 1.5-hour training is US$150 based on ¼ of the Swiss Re average cost of a workshop day.

Also assume the opportunity cost for being away from the desk for 1.5 hours is US$350 (US$1,400 * 25%). We can assume that half a day of work is required to apply the findings and to achieve the above-mentioned performance goals, which adds US$700 opportunity cost for not being productive.

Therefore, the total related cost of this learning investment is assumed to be US$1,200 (US$150 + US$350 + US$700).

The ROI in this case equates to a high 255% (US$3,060/US$1,200).

Don’t forget this ROI calculation is not considering the above-mentioned non-quantifiable value.

Additional savings could result since the savings could reoccur in subsequent years and the learnings from the workshop could be applied to other situations. In your own individual case, the numbers may differ, our intention here is to offer an example for creating your own ROI calculations.
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