The Constraints that I Face in my Communication Effort

After reading the Diagnostic for Risk Communication packet, I noticed that one section identifies constraints to consider when approaching my audience. In “The Tasks of Good Risk Communication Practice,” it explains the necessity for a business to “[earn] the public’s trust for its statements about the risks for which it is responsible” (Firschoff). Since my audience is company management which is responsible for reporting accurate financial statements to its stakeholders (ie. employees, investors, other firms, lenders), it is necessary to consider the types of questions which could be raised by the stakeholders as a result of the financial statements. After I identified this as one of the main components to my financial risk management effort, I needed to see how management would respond to such questions. These questions could be “How do I know that these financial statements were completed ethically?” or “Whose to stop me from investing into another company?” or “How do I know that company management is capable of understanding the complexity of the financial statements?”

After thinking about these questions, some of them may not have a solid answer. So, I developed my solutions, which were outlined in the memorandum, which I felt could best convince company management to be responsible when verifying financial statements. Implementing solutions such as stronger ethics policies or utilizing the services of Certified Fraud Examiners (CFE)’s could both increase management’s awareness of their own actions, and thus the trust in their stakeholders. I feel that these solutions will help reduce the risk of securities fraud, which is “more prevalent today than it was in 2002 when SOX was introduced” (Hawser). This indicates that earning the public’s trust is one of the most vital aspects in mitigating risks.

On page 132 of the class text, there is a table which illustrates how to analyze an audience in relation to consensus communication (Lundgren and McMakin). I noticed that the characteristic “Experience with other risks” and “Effect of the risk on them” are very important characteristics of my audience. Company managers may not all have experience with preventing or detecting securities fraud. While managers have seen the impact of fraud scandals, they may not have directly experienced its effects. Therefore, it is necessary to include research on the effects of the recent securities fraud scandals to help clarify what managers should do in preventing securities fraud. Also, company management may not feel that this risk is very important, even though management is also a stakeholder. If a manager reports false profits, they are held liable for fraud.

Perhaps managers feel that they have stable internal controls[1] around their money and assets. This is good because it implies that managers feel they are implementing strong methods for safeguarding their company’s assets. Therefore, overcoming these two characteristics of audience will take research on how management can deal with the risk and demonstrate how the risk effects management.

One final part of my project which I had difficulty with at first just from reading the texts was how to identify who I was in this issue. I needed to establish my authority in the financial risk management situation by observing constraints from my audience. Therefore, I felt that defining that I am part of a team of Certified Fraud Examiners helps create my authority. As a CFE, I am responsible for following a Code of Professional Ethics, which greatly increases trust in my audience. Knowing that I am communicating to my audience about the concerns with securities fraud ethically and accurately will help convince company management to adhere to my solutions.

[1] Internal controls are sets of checks and verification procedures that a company implements for managing portions of its assets.