In many organisations, managers are increasingly comfortable reading financial reports. They can follow a profit and loss statement, recognise whether costs are rising, and track performance against budget. Yet despite this growing familiarity with numbers, a persistent and far more consequential problem remains. Managers often accept financial information without challenging the assumptions that underpin it.
This is where financial decisions frequently fail. Not because the data is unavailable, but because it is taken at face value. Forecasts are approved because they appear reasonable. Business cases progress because the headline figures look positive. Investment proposals move forward without meaningful interrogation of the risks embedded within the numbers. Over time, this creates a false sense of control and a significant governance exposure.
Check Course: Financial Decision Making for Managers Course
Basic financial literacy allows managers to read the numbers. Financial judgement requires them to question them.
Forecasts and business cases are not neutral facts. They are constructed views of the future, shaped by assumptions about demand, cost behaviour, timing, execution capability, and external conditions. In practice, many forecasts reflect optimism bias, commercial pressure, or poorly tested scenarios rather than realistic expectations. When managers fail to challenge those assumptions, they effectively endorse them.
This is particularly evident in budgeting and forecasting processes. Budgets are often treated as commitments rather than hypotheses. Forecasts are revised incrementally without revisiting the underlying drivers. Cost estimates are assumed to be stable even when operating conditions are changing. When outcomes deviate from plan, the explanation is often attributed to external factors rather than flawed assumptions embedded from the outset.
From a governance perspective, this is a material risk. Decisions based on weak or untested assumptions expose organisations to cost overruns, missed targets, liquidity pressure, and reputational damage. When scrutiny arises, whether from senior leadership, audit, regulators, or boards, the question is not whether the numbers were presented, but whether they were properly challenged.
Managerial accountability sits precisely at this point.
Managers do not need to be finance experts to fulfil this responsibility. What is required is the confidence and capability to ask disciplined financial questions. What assumptions drive this forecast? How sensitive is the outcome to changes in volume, cost, or timing? What happens if delivery is delayed or demand softens? Where is risk being absorbed, and where is it being ignored?
Too often, these questions are left to finance teams. This creates a dangerous separation between decision ownership and financial understanding. Finance can provide analysis, but managers own the decision. Without the ability to interrogate financial logic, managers become dependent on others for assurance they should be providing themselves.
Investment decisions expose this weakness most clearly. Many managers are familiar with techniques such as net present value, internal rate of return, or payback. Fewer understand how easily these outputs can be distorted by optimistic assumptions, selective time horizons, or understated risk. A positive investment case does not guarantee a sound decision. It simply reflects the inputs chosen.
The same applies to operational decisions. Pricing changes, resource allocations, outsourcing choices, and project approvals all rest on financial assumptions that deserve scrutiny. When managers lack the confidence to challenge those assumptions, poor decisions are often only recognised after financial damage has already occurred.
Developing this capability is not about turning managers into accountants. It is about strengthening decision quality. It is about recognising that financial information is an input to judgement, not a substitute for it. Managers who understand this distinction are better equipped to operate within governance expectations and to protect their organisations from avoidable financial risk.
This is why GRC Academy positions financial decision-making as a governance capability rather than a technical skill. The ability to challenge numbers constructively, to recognise assumption risk, and to take accountability for financial outcomes is central to effective management. It is also increasingly expected of leaders operating in complex, high-pressure environments.
Reading the numbers is no longer enough. In a world of rapid change, constrained resources, and heightened scrutiny, managers must be able to question them, defend them, and stand behind the decisions they support. That is the difference between financial awareness and financial accountability.
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