The overwhelming majority of senior finance executives (94%) believe that boards of directors regard their CFOs as critical strategic business partners, according to a survey conducted last year by CFO Research, on behalf of Kyriba.
Yet while CFOs provide a breadth of support to boards, they do not always provide them with sufficient information and decision-support data in the following six key areas: fraud monitoring and mitigation; performance risk management; strategic and operational risk management; growth strategy support; cost control and strategic decision-making.
A recent webcast, hosted by Chris Schmidt of CFO Research and sponsored by Kyriba, explored the key findings of the survey and addressed the issue of what boards are really looking for in their CFOs. The expert panel of speakers comprised John Granato, Chief Financial Officer of The Andersons, Inc., Roxi Wen, Chief Financial Officer of Elo Touch and Bob Stark, Vice President of Strategy at Kyriba.
Fraud has long been a concern for boards because of the huge financial and reputational risks it presents. Today the threat is heightened further by the rise of cybercrime and hackers who target payment systems. It sits squarely within the CFO’s remit because boards expect that payment and other financial systems will be sufficiently protected to prevent fraud from happening and that processes exist to mitigate losses in the event that the organization is hacked. Granato observed that it is also part of the CFO’s role to educate employees on cybersecurity – for example, explaining what a phishing attack might look like – and to improve processes so that fraud can be uncovered sooner rather than later.
“Boards don’t want to have fraud,” said Granato. “As a CFO, I get 10-15 wire based phishing emails a week that get through, and thousands get stopped! This is a problem that is ongoing. We need to continue to educate the board about how we are managing, preventing the hacks. We need good master data governance.”
According to Stark, the four components of a successful fraud prevention strategy are:
- Data security – financial data must be protected both within the organization and in transit.
- Application security – it should not be possible to access financial systems through the combination of a user ID and password alone; other security measures must be in place.
- Workflow controls – these include segregation of duties and separation of processes.
- Real-time detection and monitoring – these should be applied to everything from payment systems and bank account management through to supplier portals.
Additional reading: 5 Key CFO Challenges for Addressing Payments Fraud
Business continuity planning
As organizations become more complex, and supply chains grow ever longer, the threats to business continuity increase. A natural disaster in one country can threaten the viability of a company on the other side of globe. “It is important that the organization has an in-depth understanding of the components of its global supply chain and how its business model is impacted by that supply chain,” said Wen.
Boards expect their CFOs to contribute to robust business continuity plans that allow the organization to keep serving its customers even if it has been plunged into a state of emergency. These plans need to address the immediate emergency as well as the shorter- and longer-term scenarios. They also need to be updated as conditions change. Stark highlighted that part of business continuity planning involves ensuring that IT systems have the same level of protection in a business continuity scenario as they do in “every day” mode.
Technology as an enabler
Since technology is an enabler of strong business decision-making, it can represent the difference between success and failure. So there is the same onus on CFOs as there is on other business leaders to make good use of technological tools. “It’s definitely a very important part of our job, having the right understanding and capability in the organization with regard to technology,” said Wen. She added that it is not possible to have a sound internal control environment unless the right systems and infrastructure are in place.
Granato observed that technology is critical to retaining customers and driving the “fast, analytically based decision making that is essential to compete today”. He also noted: “It isn’t just about the quantity of data. It’s about having an understanding of what data is usable and actionable. I think finance has a unique perspective on that, along with operations.” Nevertheless, Granato said that while CFOs are well placed to assess how various systems and tools could be used together, they also have a responsibility to get the right balance between investing in technology that enables the business to perform better and paying for functionality that is surplus to requirements.
The CFO of the future
Boards expect a broad range of results from their CFOs today, so what will they ask of them five years down the line? With the business landscape changing rapidly, and automation set to play a much bigger role in how companies operate, Wen anticipated that CFOs would need to have a high level of strategic involvement with data and support the board with far-ranging analysis. “I’d say that what-if scenarios are increasingly going to be expected by the board,” she commented.
“It’s going to move toward a more strategic conversation between the CFO and the board,” Granato predicted, “covering topics like how markets are evolving and how we align to stay competitive.” He also highlighted that condensing data into useful packages of information that inform the board will become an important part of the CFO’s remit. “It’s going to be really strategic, but also tactical in terms of getting the right information to the board to make decisions,” he said.
Stark commented that CFOs will be expected to use technology as an enabler for the business to do things better in future than it’s doing them today. “Using technology just to automate what you do today doesn’t have the right value,” he said. “You need to understand the value that technology is bringing to determine whether an investment needs to be made.”
Click here to find out more about the six areas where CFOs must deliver more value to the board and to listen to the webcast in full.