CONTROLLER Magazin 3/2020

110 Internationaler Controller Verein eV Time to change: the ethical responsibility of controlling 1. On the website of the University of Applied Sciences in Münster you are quoted in Feb- ruary 2018: Artificial Intelligence, Virtual and Augmented Reality will change eco- nomics and our lives within the next five years significantly. What skills do you teach your students to be prepared for this essen- tial change? Wasserman: There are four essential skills that I try to encourage my students to develop: 1) Awareness of disruptive change ... how to recognize disruption, how to respond to disrup- tion proactively, especially by taking a custom- er-focused view of an industry (this is typically part of design thinking but works very well to teach about disruption). This gets them aware of the context in which AI, AR, and VR are enter- ing both B2B and B2C markets. 2) How to learn continuously ... information gathering, competitive intelligence, asking good questions/having good conversations with experts, and overcoming cognitive biases (con- firmation bias especially) that often times block us from making the right decision at the right time. This helps them get up to speed quickly on the current state and the expected future state of technology, applications, and market acceptance/barriers of new technology in industries in which they are interested. 3) Understanding both the benefits of technol- ogy and the risks, especially from the ethical perspective ... who controls data and safe- guards it against abuse, cultural differences about privacy and data security ... contrasts between EU (especially Germany), US, and China are really interesting for students. This helps them understand the full picture of the impact of these technologies on companies, their customers, and society. 4) Teaching how AI, VR, and AR have the oppor- tunity to change the world for the better, in a wide variety of applications. It amazes me when students come up with cool applications of new technologies in ways experts haven’t yet thought about. This is the power of fresh per- spectives thinking about solutions in a creative way and it leads to them thinking about how these technologies can transform industries (or how they may fail). 2. You stress the value of sustainability and the need, that controllers are obliged to it. What if their management partners don’t agree on this focus? Wasserman: This is the big challenge – to work with management partners to understand the full cost of initiatives, to value non-financial as well as financial benefits, to look at both short- run and long-run financial models, and to value the intangible benefits of leading sustain- ability efforts versus the intangible costs as being viewed as a laggard by customers, cur- rent/potential employees, and investors. This is not a zero-sum game, there is the need to present multiple perspectives to investment or operational procedure questions related to sustainability, there is the need to take an eth- ical stance, and there is also the right time and place to propose creative alternatives that while not perfect, are an acceptable compro- mise to move forward with. 3. You demand controllers „to act in ways that are required by the ethical standards that guide this profession“. What are these ethical standards? Wasserman: The ICV along with other profes- sional organizations in related fields, such as the Institute of Management Accountants and the American Institute of Certified Public Accountants either formally or informally hold members to clear ethical standards about due care, objectivity, and integrity in communication and disclosure. In my view, this is especially rel- evant when decisions about environmental per- formance could influence the health and safety of employees, customers, or residents of the communities in which the company operates. This is not news to ICV members (see the 10 core elements). Fiduciary principles require acting in the best interest of those we serve, and in the sustaina- bility context, implications covered under fidu- ciary duties could be short-term, like air pollu- tion or safe working conditions, or long-term such as carbon footprint and the use of non-recyclable raw materials. I argue that controllers have the ethical responsi- bility to ask top management to fully disclose environmental risks and to clearly consider direct/indirect, financial/non-financial, and short-term/long-term revenues and costs of major decisions. This should be part of the organization’s mission and vision, should be part of internal and external reporting procedures, and should be included in decision-making about investments and ongoing operations. Ulti- mately, the CEO and the board is responsible for making these decisions, but my interpretation is that, especially from the strategic management perspective, the controller has an ethical respon- sibility to ask for an objective evaluation of the data, full disclosure of costs, benefits, and risks, and to have a decision-making process that includes sustainability as part of the conversation. I argue that anything less than this is a violation of the ethical standards that guide this profession, even though this might mean a break with ‘how things are typically done’ in the field or past prac- tice in a given organization. I argue that anything less is a failure to meet the ethical standards of due care, objectivity, and integrity. n 3 Questions to Michael Wasserman, Ph.D., Professor of International Management FH Münster (announced as speaker at 45. Congress der Controller)