Much has been made of the problems surrounding the introduction of new International Financial Reporting Standards (IFRS), but for those taking a 'glass half full' approach, these reforms could spark a new wave of efficiency and productivity. For the insurance industry in particular, IFRS offers an opportunity to optimise current practices and revamp their operations. The time has come to start taking advantage of this brave new world.

Just one year from the deadline for companies to comply with newly imposed requirements for International Financial Reporting Standards (IFRS), the task ahead has not gotten any less daunting. There has been no miraculous cure-all, no stay of execution for those trapped in indecision, and above all, no short cuts. The call is in place for capturing significantly increased transparency in reporting that will help to eliminate confusion - intentional or otherwise - for shareholders, analysts, and the business community at large.

As many corporate leaders have already grasped, this means a complete overhaul of the reporting process for a large percentage of companies, especially in the insurance sector where very little scrutiny was given to accounting standards until IFRS was brought to life. A staggering amount of time and money will be poured into these efforts - an estimated €150m for financial institutions alone. Staring at the necessary commitment and the demanded outcome of a community unified and educated through full disclosure, the real choice before these companies is not how best to achieve compliance while minimizing the impact on operations, but whether or not to turn a regulatory mandate into a true business opportunity - and insist on making a tremendous impact on operations.

The option exists, of course, to meet expectations with a temporary patch that will enable transparency with reduced effort and expenditure. A patch will serve as long as it is meant to: IFRS requirements will be met, and then further regulatory developments or unforeseen operational nuances will appear that will make additional adjustments necessary. Because a significant commitment is already demanded, advantages can be drawn from the process of examining and restructuring internal reporting processes. In an insurance industry that must completely realign its perspective on a slew of issues, including the fair valuing of assets, invoking such foresight and in-depth examination at the leadership level could yield immense benefits in the mid- and long-term.

With the hope that the most difficult of economic stretches is at long last subsiding, the objective across all industries is to prepare for the future by pushing forward within each distinctive corporate setting. A plethora of additional issues facing the insurance industry provides added incentive to address operational efficiency. In their constant pursuit of a competitive edge, companies are looking to address a combination of front-end and back-office challenges - efforts that should not have to be deprioritized in order to comply with IFRS. On the contrary, the opportunity exists to begin comprehensive work on such wide-ranging issues with solutions that start improving companies at the root of their concerns.

Much easier said than done, as companies are already frustrated and wading waist-deep through an increasingly complex environment. The necessity of maintaining reporting practices while still implementing change is causing businesses to work with fragmented (and continually fragmenting) processes and systems: the mandate to successfully upgrade that infrastructure is in itself a substantial challenge.

Indeed, within the scope of accommodating IFRS, companies are exhibiting frustration not with the overarching objectives, but with individual standards: the sum is more palatable than the pieces themselves. Companies may have to operate on three sets of standards (local GAAP, U.S. GAAP, and IFRS) as they move towards compliance. Strain will manifest in the effort to maintain consistency in these standards while juggling through the transition with limited time and resources.

Promising for companies is the level-minded, unbiased manner in which the International Accounting Standards Board has thus far approached the issue. The IASB has been consistently open to receiving suggestions and concerns and has shown a willingness to work through universally identified issues. They have sound structures in place to ensure that companies are informed, and have instituted an exposure draft through which insurers can comment on proposals. This kind of understanding demonstrates that while the board is quite serious about timely compliance, they will adapt to reflect concerns as they develop new regulations and timeframes.

As institutions have begun to invest more in IT services, there are indications of a healthier environment in the region. Also important, though, are the signs that business leaders are ready to move beyond short-term cost-saving measures and invest for the future with more comprehensive IT infrastructure work.

This mindset reflects confidence in the IT services that are available and constantly evolving. Every company has its unique situation; defining the path to the most effective operational platforms and migrating to it is the next step. And while technology itself is no longer a barrier, the marketplace is not a static atmosphere. Migration must be managed through a carefully controlled program that leverages the offerings of disparate providers into the strongest solution.

The ultimate goal is to address lagging back office operations, which are a drain on business resources that can only be reduced by making fundamental systems changes. In order to incorporate straight-through processing efficiencies into the new reporting structure, the organization's management of its financial architecture needs to be placed into the proper context. Limiting objectives strictly to compliance will not aid in generating perspective on analyst pressure, the benefits of full transparency, or improving the business from the inside out.

IFRS is a demanding change of course. During the struggle to achieve compliance the distinct advantages goes to companies that have a grasp on advanced operations. The challenge is not finding a way to meet the requirements, but is indeed much simpler: to build the most effective office, demonstrating to clients and the financial community at large that the future will be met with agility, strength, and confidence.

Article by John Morley is Senior Manager, Financial Services, at BearingPoint