No may be a common word in a CFO’s vocabulary, but there are times when yes might be a wiser response. Knowing when to say it is the tricky part.
As the role of the CFO continues to evolve, several new areas are falling under the CFO’s responsibility, making it more difficult to make the right decisions at all times.
According to a recent CFO.com article sponsored by PwC, financial leaders should be saying yes to investments in the following key areas:
- Advanced analytics: Finance departments can use Big Data analytics to help identify and attain strategic objectives.
- Cloud technology: Finance organizations can use cloud-based applications to produce more accurate and detailed reporting to support more informed decision making.
- Robust compliance: These days, rules and regulations are constantly evolving, requiring effective and continuous attention to the compliance function within the finance organization.
The right tools for calculating risk
Managing risk in an innovative growth environment requires more than just a standard no. To appropriately deal with compliance and risk, CFOs need to effectively use the right tools for calculating risk, according to an article sponsored by Wipro on runsimple.cfo.com.
To allow more business innovation, Wipro says CFOs should explore potential areas across the organization in different functions and geographies where a company can safely take more risks. CFOs must also use risk management tools appropriately in order to help protect the business and improve financial performance. This includes paying special attention to the following areas:
- Cloud control: The multiple benefits of cloud computing need to be weighed against the risks involved in having sensitive information stored in an external setting. CFOs should ensure that they take appropriate measures to maintain the security of corporate data.
- Security operations: CFOs should ensure that the business establishes and maintains a security operations center (SOP) to monitor the company’s network for suspicious activity, including attempted security breaches. This seemingly costly investment can save a company much more in the long term by reducing the risk of potentially devastating cyber attacks.
These types of risks have traditionally caused CFOs to be fairly conservative – hence their common reputation as risk avoiders. That reputation may hold true according to a recent runsimple.cfo.com article on Deloitte’s latest CFO Signals survey. The 2015 Q3 survey of finance executives from 114 companies across North America showed a conservative bias in the following areas:
- 42% said they had a bias toward existing products, with just 31% inclined toward new offerings.
- 58% of CFOs said they had a bias toward current geographies, compared to just 21% who were partial toward new geographies.
Despite their apparent risk aversion, many CFOs understand the need for innovation and are willing to say yes to exploring innovative areas of limited risk, as long as there is a fairly quick payback period.
Find out more about Three Trends That Will Change The Role Of The CFO.
Discover more on Just-In-Case Decision Making and the latest Deloitte CFO Signals survey.
For an in-depth look at data analytics, cloud computing, and cyber security, download the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.
To learn more about business innovation in the digital era, download the SAP eBook, The Digital Economy: Reinventing the Business World.