Bancorp Treasury Services Limited

Make Risk Count.

SLOW CFO EVOLUTION FAST-TRACKS BUSINESS RISK

09 April 2010

Cliff Brown, Client Advisor at independent financial risk management advisors Bancorp Treasury Services, says it is well recognised that the CFO role needs to evolve in light of the current economic climate, yet many businesses have done little to put the necessary systems, support and resources in place.

“Gone are the days where CFOs could simply play an administrative and accounting role. Nowadays they have an important strategic role to play in creating value for the business,� he says.

Mr Brown says systems need to be put in place to assist CFOs to communicate within a broader strategic context. This will enable them to become the strategic financial information conduit to the board, the chief executive officer, executive management and external stakeholders such as funders and shareholders.

This requires technical systems that allow CFOs to get information quickly and efficiently from different parts of the business – particularly risk creators such as sales people and buyers whose roles have a direct impact on a business’s bottom line.

“Chief executives and boards need to better support CFOs. They can do this by demanding timely organisational compliance with the CFO’s information requests.

“Modern CFOs should be regarded as chief executives’ co-pilots, rather than being seen as akin to ground staff quietly beavering away behind the scenes.�

The economic downturn means that many businesses have gone into ‘fire fighting’ mode, channelling resources to staying afloat rather than providing the CFO with the necessary personnel for effecting the shift to a strategic financial risk management role.

“It’s easy for CFOs to get tied up in the monthly reporting cycle’s endless number crunching without having ample time to step back and look at the organisation’s financial risk management big picture.�

Mr Brown says it is vital that boards and chief executives complement CFOs by ensuring their own financial risk management knowledge is up to speed. This will ensure that all operational and strategic financial risk factors are taken into account.

Although boards and CEOs can be doing more to assist the CFO’s shift from an accounting to a strategic focus, CFOs need to ensure they have the necessary skills to deliver true value to the business.

This may include gaining academic or professional qualifications beyond traditional chartered accountancy and enhancing personal skills such as effective communication, taking a collaborative approach and engaging cross-functional consultation. Active membership of relevant professional bodies can help ensure CFOs are up to date, well informed and exchanging ideas about best practice.

“The CFO has an important role in helping to break down organisational information silos.

“Only when financial information is flowing freely within an organisation can a CFO truly begin to understand the nature and extent of financial risk, and propose strategies to mitigate that risk,� says Mr Brown.

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