How Can Management Accounting Theory Be Used During Risk Management Process?

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Risk management is one of the most important and attractive process for manager to planning and making economical decision. According to Lees (Drury, 2015) there are three typical aspects to deal with risks. As a comprehensive theory and key component of risk management, Management Accounting plays significate roles in providing information usefulness to manger to cope risk which may be facing in the future. In this essay, firstly a brief introduction of what risk management is will be given and defined. Secondly how can management accounting theory be used during risk management process will be provided, contrasted and discussed. Moreover, what challenge management accountants face while providing such information to managers will be shown and discussed. Last but not least, a conclusion of this essay will be provided.
As a commercial organization, company aims to maintain its day-to-day operating and earn profits. Taken-for-granted, such
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Management accounting is a significant component of risk management process that helps decision maker to plan and manage future strategy by providing technologies. As an example, balanced scorecard is a plausible method which inherent financial and non-financial method together that provides understandable objectives to managers. However its restriction is clear that has not clarified the priority of each objective so managers may not make sure which objective should achieve first. It is accountant’s ‘mission’ that assesses risk and mitigates it. Management accountant therefore plays delivering information usefulness and consulting roles for risk managers. Difficulties are observe that accountants needed to be educated properly, match their result fitted with organization’s risk appetite properly, consult to mangers who make mistakes and have different risk attitude and challenge the organization’s

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