- December 21, 2022
Strengthening risk management through rightful assessment and monitoring amid global downturn
The CFO’s role in the current economic climate is rapidly evolving and diversifying. They are now becoming movers and shakers of corporate strategy in the C-suite and boardroom, serving as a key strategic advisor to the CEO and the Board.
With technological advancement saturating almost all the areas of business and finance, strategic thinking and data-backed decisions have become key enablers to ensure and drive business efficiency and CFOs are called upon to provide the same to ensure business continuity and growth amid fear of global recession. Moreover, it is crucial, now more than ever, to deploy a digital tool to gain real-time visibility across various processes of the organization to churn out useful information.
Therefore, while traditionally, CFOs were expected to forecast, budget & monitor, and ensure the financial soundness of the organization; today they are expected to collect and harness the potential of data for meeting larger organizational goals. This has become easier with the advent of Cloud technology, which has enabled data visibility and availability through secure and confidential channels and real-time dashboards.
The CFO’s priority has shifted from managing cash flow, budgeting, monitoring, and dispensing financial statements to assessing risk; formulating strategic corporate policies and controls; monitoring compliances; and managing business spending. Besides, contractual obligations in businesses are emerging as vulnerable elements since they can be easily compromised in terms of data handling, data exposure, data leaks, and more. The reason is Cloud onboarding in the wake of the pandemic, which has exposed many of these contracts to major risks of liquidated damages.
Therefore, risk identification, measurement, mitigation, reporting, and governance have become key factors in building an effective risk management framework and who better than CFO is well-positioned to do this, especially when the service industry is reeling under fear of recession?
But how can CFOs strengthen risk management? In my view, awareness and knowledge of several government initiatives, grants, and facilities offered to businesses through various government schemes can go a long way in minimizing fraud, abuse, and mismanagement, and in helping businesses remain more compliant. This can also help CFOs in guiding their executive team to make informed decisions in terms of driving business growth and planning business expansion.
Written by Ms. Anita Ananthan. Ms. Ananthan is the Senior Vice President & Chief Financial Officer – Legal & Compliances, Credence Analytics. She is also the founder of ‘Club of Hope’, an NGO for kids and the old.