CFOs Face a Future of More Risk Management and More Regulation

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) will face in the future.


The future landscape for the CFO is presented in a new global report "The Changing Role of the CFO" published by the Association of Chartered Certified Accountants and the Institute of Management Accountants.


The report highlights the emerging priorities which will have an impact on the future role of the CFO and cites nine future key issues shaping the finance function’s top job, including more regulation, risk management and technological impacts.


"We see more pressure on the CFO role than ever before," says Jamie Lyon, head of corporate sector at ACCA. "Apart from the sheer breadth of the role now, it really is a question of having enough time in the day to prioritise and deal with all the issues that need dealing with."


Lyon went on to say that businesses are really asking a lot from their top finance leaders right now.


"We don’t see this getting any easier, particularly with the level of volatility and business uncertainty.  It places the finance function and finance leaders under great pressure and scrutiny, but it also continues to provide great opportunities for finance to influence the organisation."


According to Lyon, the CFO role of the future will be truly unique, requiring a really special blend of capabilities and skills.


Shaping the CFO's Future Role
There will be no slowing down in regulatory requirements for CFOs as they seek to meet rising expectations but also influence regulatory policy development.


According to the study, significant pressure continues to be expected on finance resources and CFOs continue to question how they can deal with so much regulation


The impact of globalisation and the further 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.


Fast developing technology will provide enormous potential for CFOs to reconfigure finance processes and drive business insight through leveraging big data, but will also provide enormous challenges.


To continue to secure influence across the organisation, CFOs will need to own the insight agenda in the future


The report also says that CFOs will have to manage a greater breadth of risks facing organisations in a more uncertain and volatile environment. CFOs will face more scrutiny on the effectiveness of risk management approaches and will need to continue to develop more effective integrated approaches to risk management


Ongoing pressure to transform the finance function will be important as well.


While 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.


As the role of the finance function and the remit of the CFO broadens, so too does their stakeholder base, from traditional relationships such as banks and auditors through to the media and more customer-focused relationships.


“Speaking the same language” with different stakeholders will be key as CFOs increasingly become the face of the corporate brand.


An even more important role will arise in two key areas of strategy – validation and execution. There will be more pressure on the finance function to develop more effective processes to gauge the effectiveness of different business strategies, as well as shifting the function to better support forward looking decision making.


The advent of broader integrated reporting as stakeholders seek more meaningful reporting and commentary on the true performance of the organisation will also have an impact on the CFO's future role.


The finance function will play a key role in reporting on the environmental and social dimensions of performance.


"Increasingly, CFOs will need to help the business understand financial, social and environmental tradeoffs and be involved in major investment decisions with social and environmental impacts," says the report.


Talent will be 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.


Making these development strategies work across geographic, language and cultural barriers will be a significant challenge but the imperative to develop global finance leaders with the skills needed to run global functions is clear, says the report.



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