Slow CFO Evolution Fast-Tracks Business Risk
Many businesses are creating unnecessary financial risk for themselves by moving too slowly to support necessary changes
to the chief financial officer (CFO) role.
Cliff Brown, Client Advisor at independent financial risk management advisors Bancorp Treasury Services, says it is well
recognised that the CFO role needs to evolve in light of the current economic climate, yet many businesses have done
little to put the necessary systems, support and resources in place.
“Gone are the days where CFOs could simply play an administrative and accounting role. Nowadays they have an important
strategic role to play in creating value for the business,” he says.
Mr Brown says systems need to be put in place to assist CFOs to communicate within a broader strategic context. This
will enable them to become the strategic financial information conduit to the board, the chief executive officer,
executive management and external stakeholders such as funders and shareholders.
This requires technical systems that allow CFOs to get information quickly and efficiently from different parts of the
business – particularly risk creators such as sales people and buyers whose roles have a direct impact on a business’s
bottom line.
“Chief executives and boards need to better support CFOs. They can do this by demanding timely organisational compliance
with the CFO’s information requests.
“Modern CFOs should be regarded as chief executives’ co-pilots, rather than being seen as akin to ground staff quietly
beavering away behind the scenes.”
The economic downturn means that many businesses have gone into ‘fire fighting’ mode, channelling resources to staying
afloat rather than providing the CFO with the necessary personnel for effecting the shift to a strategic financial risk
management role.
“It’s easy for CFOs to get tied up in the monthly reporting cycle’s endless number crunching without having ample time
to step back and look at the organisation’s financial risk management big picture.”
Mr Brown says it is vital that boards and chief executives complement CFOs by ensuring their own financial risk
management knowledge is up to speed. This will ensure that all operational and strategic financial risk factors are
taken into account.
Although boards and CEOs can be doing more to assist the CFO’s shift from an accounting to a strategic focus, CFOs need
to ensure they have the necessary skills to deliver true value to the business.
This may include gaining academic or professional qualifications beyond traditional chartered accountancy and enhancing
personal skills such as effective communication, taking a collaborative approach and engaging cross-functional
consultation. Active membership of relevant professional bodies can help ensure CFOs are up to date, well informed and
exchanging ideas about best practice.
“The CFO has an important role in helping to break down organisational information silos.
“Only when financial information is flowing freely within an organisation can a CFO truly begin to understand the nature
and extent of financial risk, and propose strategies to mitigate that risk,” says Mr Brown.
ENDS