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Global economic uncertainty and volatility, fluctuating energy prices and turbulent currency markets, along with a shift in economic power are among the many challenges which chief financial officers (CFOs) around the world face now, and in the future, as per a new report published by ACCA (Association of Chartered Certified Accountants) and the Institute of Management Accountants.
The global report highlights the emerging priorities which will have an impact on the future role of the CFO. What is heard loud and clear from these events is the fact that we see more pressure on the CFO role than ever before. It is also clear that businesses are asking a lot from their top finance leaders and that many do not see this getting any easier. The following nine priorities offer an insight into what needs to be tackled:
Globalisation: The development of global finance functions dispersed more equally across the world will call into play finance leadership skills which can unify finance and present a consistent vision for the finance function across different cultures, working practices, languages and time zones.
Regulation: There will be no slowing down in regulatory requirements for CFOs, at a time when they are working to meet rising expectations, but also influence regulatory policy development.
Technology: Fast developing technology will continue to provide enormous potential for CFOs. It can be used to redesign finance processes and drive business insight, whether using big data, social media or new software applications. In order to secure influence across the organisation, CFOs will need to own the technology agenda in the future.
Risk management: CFOs will have to manage a greater breadth of risks facing organisations in a more uncertain and volatile global environment. CFOs will face more scrutiny on the effectiveness of risk management approaches and will need to continue to develop integrated approaches to risk management.
Transforming finance: Ongoing pressure to transform the finance function will be important. Whilst cost reduction may have fallen slightly down the agenda, the focus for CFOs will shift to continue to drive process efficiency and ensure finance is a valuable strategic partner to the organisation.
Stakeholder engagement: As the role of the finance function and the remit of the CFO broadens, so too their stakeholder base, from traditional relationships such as banks and auditors through to the media and more customer-focused relationships.
Defining and delivering strategy: There will be more pressure on the finance function to develop effective processes to gauge the effectiveness of different business strategies, as well as shifting the function to better support future decision making.
Integrated reporting: The advent of broader integrated reporting will mean that stakeholders will seek more meaningful reporting and commentary on the true performance of the organisation. The finance function will play a key role in reporting on the environmental and social dimensions of performance.
Talent and people: A key priority for future finance leaders as they seek to develop and retain the capabilities that will be needed in tomorrow's finance function will be about people and talent. Making people and talent strategies work across language and cultural barriers will be a significant challenge for the CFO, but the need to develop global finance leaders with the skills needed to run global functions is a clear need for the future.
These nine issues are all connected and relate to each other. For instance, globalisation has an impact on all the issues raised. In this connected world, the challenges for the future mean that CFOs need to prioritise and balance short-term and long-term trade-offs as businesses seek to reduce costs but also plan for growth in the future. The future environment presents enormous challenges for CFOs; but these challenges provide great opportunities for ambitious finance professionals seeking a rewarding and enriching career in a profession that has an illustrious past, and an equally illustrious future.
By Mohammed Sajid Khan, Head of International Development, ACCA
