Risky Business

In an interview I saw on TV this weekend, a young British millionaire said "Those who are not prepared to take risks will always end up working for those who are". Obvious really!

So how is it possible for accounting firms to survive? Accountants are by their very nature risk averse. But within accounting firms, those who take more risks are likely to be more successful and thus be promoted to partner level. And it is at that level that they, because of their risk-tolerant nature, take risky decisions that sooner or later will lead to the demise of the firm.

Perhaps this phenomenon will be the downfall of the multi-national firms, returning to local practitioners in "real" partnerships where they personally know all their partners in the firm and accept their professional judgement on technical and risk issues. That, on the other hand, gives rise to scale problems where internal resources may not exist for technical and training issues. The fees charged by those smaller firms would have to rise in order to ensure an adequate level of quality.

It's a worrying scenario if I were to return to professional practice. For the moment I will let my shareholders take the risk and keep my risk-averse head down.