Viewing the surveys conducted lately on CFOs and their challenges gives us an idea of what to expect for this role in the coming year.
Reports by PwC and Deloitte provide interesting data on the impact that the overwhelming events of the last few years have had on CFOs.
CFO in the new normal
In recent decades, CFOs have already faced significant macroeconomic risks such as:
- recessions
- high inflation,
- rising interest rates, and
- geopolitical uncertainty.
They have nevertheless remained a lighthouse in their organizations in these stormy times by preparing their companies to cope with the slowdown in global demand.
Indeed, a defining characteristic of the successful CFO is to prepare for ever more complex risk scenarios to safeguard corporate security. This role has become much more complicated in the wake of growing and emerging cybersecurity vulnerabilities.
CFOs today are required to go well beyond their financial duties, taking on the strategic responsibilities of the entire company and reporting directly to the CEO and Board of Directors.
CFOs’ difficulties in recent years
The Covid-19 pandemic dramatically tested companies all over the world. The economic fallout meant almost every company had to change course, adapting to new business conditions and very different management of their remote-working teams.
While the pandemic’s impact is diminishing, the conflict between Russia and the Ukraine with the associated implications exploded onto the scene over the past year.
As a result, CFOs around the world are developing new adaptability to uncertainty mainly out of necessity.
This sees them moving towards better planning more strongly based on future scenarios to strengthen company resilience.
The past few years have demonstrated that we can live with far higher levels of uncertainty than we think, and we can execute our work just as well (and in some cases better) in our now radically reconfigured workplaces.
CFOs’ new strategies
The significant disruptions of recent years have led CFOs to seek to double down on scenario planning to better anticipate the impact the recession – and any other new disruptions – might have on their companies.
Faced with so many difficulties, companies in every sector are being forced to make strategic decisions based on these scenarios in order to remain competitive both in the market and with staffing.
Most CFOs believe they can strengthen their companies’ resilience while staying in line with their long-term growth objectives by tackling three main areas.
Costs
To fight inflation and control capital allocation, CFOs are planning cost reductions and new acquisitions, the latter of which is also a way to acquire specialized talent that companies lack.
Teams
Although finance managers are therefore making investment decisions more critically, they are not foregoing investments that help stimulate workforce growth.
Clearly, however, the finance team’s analytical skills and the ability to rapidly extract actionable information from quantities of financial data are crucial to success.
CFOs are aligned with other C-suite leaders on workforce policy changes, such as expanding remote work options and implementing automation to mitigate staff shortages.
Technology
The pandemic, the war, and the resulting economic and market changes have highlighted:
- digitalization
- standardization
- automation
as key tools for companies to solve their own and their customer’s problems in innovative and sustainable ways.
Many CFOs are investing in technologies such as the cloud and data analytics to drive growth.
They have the power to focus investments on developing digital transformation and advanced analytics ability, and on implementing intelligent automation programmes.
Increased automation and digital transformation in operations will be key to addressing rising costs and concerns about the economy.
CFOs who have these necessary tools to better plan for future scenarios will sleep more soundly in the months to come.
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