The role of the Chief Financial Officer or CFO has been evolving rapidly as many of us were tasked with guiding businesses through the pandemic. The expansion of this crucial role has just begun. The Finance Leader in today’s day and age is versatile, future-oriented, and agile. Those who have a long-term vision, innovative ideas and technology-prudence are poised to be the most successful.
Evolution of the CFO Role
With the new fiscal year, come challenges and opportunities for innovation-led success. A modern-day CFO is a Business Partner, enabling Finance function strategy, scope & design, and sequencing transformation initiatives. Their roles will encompass several business-crucial activities in 2023-24.
Risk and Crisis Management: In times of Economic Uncertainty
When it comes to the ever-changing risk and regulatory landscapes, CFOs are facing a challenging task: anticipating and readying their businesses for the unexpected. As a result, risk and crisis management will likely become the priority of every CFO working for their organisation to thrive in the current economic climate.
CFOs should prepare their companies for a range of potentially difficult scenarios, like a probable global recession, inflation, geopolitical evolutions, and increased cybersecurity perils. To effectively respond to these risks, leaders are embracing agile, data-driven scenario planning. This will allow them to model the potential impacts of market risks and identify the necessary steps to mitigate them. CFOs also have a vital role to play in driving collaboration by partnering across functions and responding to new laws and regulations. By leveraging data-driven insights, CFOs can ensure their companies are prepared for any eventuality.
Integration of Modern Technology in Business Functions
CFOs prioritised digital transformation throughout the pandemic, with many protecting digital investments from cost cuts, reallocating resources, and even speeding up some initiatives. More than half (53%) of finance heads are looking to accelerate digital transformation using AI, automation, data analytics, and cloud solutions to intelligently automate manual processes and help drive standardisation.
By welcoming tech-powered changes, CFOs can lead their teams in unlocking the prospect of advanced analytics and connected data to better predict trends, reduce risk, enhance operational performance, and navigate complex business environments. Digital readiness is the key to fulfilling new mandates, and ensuring business continuity in uncertain and challenging markets is vital.
CFOs are also playing a key role in aligning sustainability with the overall purpose of the business. Their focus on ESG strategy and value creation will lead to better market and consumer sentiments. Business ecosystems are increasingly rewarding ESG-focused companies. An industry report by EY outlined that in the future, the Business Ecosystem will witness a significant shift across the value chain. Leading practitioners agree that CFOs must be proactive and instrumental while helping the company and executive team define ESG goals for their company (and their industry). CFOs must be at the forefront of identifying the environmental risks and social impact. They need to enable corporates to mitigate risks and move toward ESG opportunities.
The quantum of business environment change over the last few years has enabled the CFO’s role to further evolve as Navigators and Strategists. For the coming year, Finance Leaders will be playing a key role in steering their organisations through economic volatility to long term sustainability. Businesses will expect them to lead their traditional roles while being digital & analytics-led growth enablers.
(The author is Prashant Maheshwari, CFO, Sodexo Benefits & Rewards Services India, and the views expressed in this article are his own)