Risk Management Among Top 3 Skills for Sought-After CFOs
The role of the chief financial officer (CFO) is evolving. The modern CFO has transformed from a numbers-driven analyst to a leader who oversees initiatives across the entire increasingly digital enterprise. Part of that change is a deeper focus on risk. That’s according to a new research report from Accenture, The CFO Reimagined: From Driving Value to Building the Digital Enterprise.
The report lists the three most important skills for CFOs going forward:
- Long-term strategic thinking.
- Identifying, anticipating, and managing risk.
- Insight into and understanding of new technologies.
Perhaps this focus on risk is due to the fact that 81 percent of survey respondents expect the future to be more volatile, making a CFO capable of navigating risk an even more valuable asset.
The report also revealed that CFOs and their finance teams are viewed as a key source of data, including risk data. Accenture found 59 percent of finance teams are reporting increased requests for risk and compliance data, particularly at high-growth firms. The CFO and his team are also increasingly involved in governance and data management, which are both tied to risk.
Yet less than half of those surveyed feel like they are able to harness data analysis to identify future risks and opportunities. They are also extremely concerned about cyber risk.
What are the lessons here?
CFOs need to take an active interest in risk management. A CFO’s interest in risk management needs to go beyond the traditional areas of credit and financial risk and look at all areas of risk. Operational, strategic, cyber, and reputation risk all concern the CFO.
CFOs are a bridge between strategic planning and risk management. When the second most influential C-suite member (next to the CEO) is encouraged to take a big-picture approach to strategy, risk, and technology, these areas will naturally overlap in a way that encourages cross-functional interactions. The CFO should be well positioned to break down silos between these areas.
Financial institutions need tools to measure and monitor risk. Risk management and compliance data doesn’t come from a checklist. Key risk indicators and key performance indicators go beyond measuring and monitoring individual risk to contribute to the broad picture of an institution and its operating environment. Risk data needs to be quantifiable and available to the finance function so it can be analyzed in tandem with data from other areas for broad insights.
The CFO and CTO need to work together. As the financial function becomes increasingly digital, the CFO is becoming more adept at understanding and implementing new technologies. This goes beyond data analysis to also include cybersecurity. The CFO and CTO need to be partners in these discussions to ensure that technology decisions support the long-term strategic goals of the organization as a whole, including the financial function.