CFO Responsibilities Shift as Cybersecurity Takes Center Stage

Whether you’re mid-career in a financial discipline, considering various branches of executive leadership or a sitting CFO today, the changing CFO role affects you and your business. Here’s a look at some of the most important developments.

PUTTING A NUMBER
ON INCREASED RISK

According to a recent survey by the Association for Financial Professionals (AFP), 88 percent of corporate practitioners reported that their organizations had been a target of either an attempted or completed cyber attack in the past 18 months. Ninety percent report that the emphasis on cybersecurity at their organizations has increased in the last three years. Business email compromise scams and the rise in wire fraud are among the risks being addressed by treasury and finance leaders.¹

EVOLVING OPPORTUNITIES

These risks present opportunities for today’s chief financial officers (CFOs) beyond the traditional power of the purse. A McKinsey survey found that the average CFO today is the reporting authority for 4.5 business functions, including some unconventional departments like IT (38% of CFOs), board engagement (24% of CFOs) and physical security (13% of CFOs).² This gives CFOs a stake in operations well outside the traditional boundaries of moving money in a responsible fashion.

A CFO with vision can engage these nontraditional financial workforces in more broadly defined fraud prevention and risk management tasks, in line with the CFO’s growing responsibilities for big-picture IT projects and strategic input. Evolving business models are amplifying and expanding the CFO’s classic fraud prevention duties in nontraditional ways. Day-to-day operations that once required teams of trained professionals are being automated or consolidated in shared service centers, a shift that CFOs are keenly aware of.

CFOs are managing risk with long-term strategic perspective, including the cultivation of sustainable business practices. “CFOs are gradually becoming more involved in the management, measurement and reporting of sustainability efforts of their companies,” writes Ian Hong of KPMG.³

EY Global Performance Improvement Finance Leader Tony Klimas notes, “Treasury and finance leaders implement proper controls, while ensuring that they complement their IT department’s cybersecurity protocols, shared service or outsourced arrangements.”⁴

THE ROLE OF AUTOMATION

EY’s 2018 CFO survey found that 69 percent of financial leaders see their role shifting in the face of increasing automation.⁵ As a result, Klimas predicts that, “As finance and accounting processes are increasingly automated, the finance back office will shrink, as a virtual workforce begins to replace large numbers of full-time employees.”

The shift is already apparent in the profile of a contemporary CFO hire. Search firm The Alexander Group reports that just 40 percent of candidates selected in its recent CFO searches are CPAs or hold similar certification.⁶

And it’s visible in the way CFOs are reorganizing their duties, including offloading basic financial operations to other departments. In a 2018 Accenture CFO survey, 67 percent of respondents said their goals include pushing “finance activities such as reporting, planning, budgeting and forecasting” to nonfinancial executives.⁷ “We’re convincing them that it’s beneficial to self-report, so finance people can spend their time enhancing other areas of the business,” said one multinational financial controller in the survey.

DRIVING STRATEGIC INSIGHT

Very few CFOs are completely satisfied and willing to sit still with their current skills and responsibilities. In a 2016 EY survey, only 9 percent of CFOs said their current role satisfied all of their ambitions.⁸

The CFO has become a trusted source for strategic insight and long-term planning equal to, or in some cases even greater than, the chief executive. The Economist, in the aptly-titled article “The Imperial CFO,” notes that CFOs are gaining an increasing amount of power by taking more roles on corporate boards, participating in CEO search and being heard in executive evaluation. And in up-or-down matters of corporate direction, their voices can win out. Writes The Economist, “Leo Apotheker’s days as CEO of Hewlett-Packard were numbered when his CFO, Cathie Lesjak, told the board that she strongly opposed his decision to buy Autonomy, a software company.”⁹

Earning and keeping that empire does mean today’s CFO is expected to show more than just careful attention to detail. Nurturing corporate and individual growth are now important gauges of CFO success as well. “A CFO is expected to be an outstanding leader, so you will need to show the board that you understand how to recruit, motivate and develop the best people,” writes EY in a CFO career development guide.¹⁰

A TRANSFORMATIVE FORCE

A significant number of CFOs are looking for the highest corporate offices available: that of the CEO (27%) or corporate chair (9%).¹¹ But even those who are satisfied in the CFO office are using it to steer their organizations in entirely new directions as business transformation leaders. CFOs are increasingly put forward as ideally suited to direct these fundamental overhauls of goals, direction and execution.

In the absence of the CFO, McKinsey writes, business transformation “will lack a meaningful benchmark to gauge success, managers will be tempted to focus on the biggest or most visible projects instead of those that promise the highest value, and expected transformation benefits won’t make it to the bottom line.”¹²

That’s because a CFO with a reputation for strategy projects both numerical assurance and innovation in his or her voice. “There’s a huge opportunity for CFOs to lead the charge on transformation to ensure that they’re not just leading traditional finance activities but also being change agents and leading transformations across the organization,” notes McKinsey & Company Consultant Priyanka Prakash in a 2019 podcast.¹³

CFOs are clearly rising to the challenge and owning their new opportunities as transformation leaders. In the 2018 Accenture CFO survey, 80 percent of respondents said they consider the finance department better than nonfinancial peers at forecasting long-term value of technology, compared to just 7 percent of respondents who believe finance is less well-suited than others.¹⁴ CFOs will not simply sit and count: They will stand up to be counted as active leaders in the future of business.

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Sources

1. 2019 AFP^® Cyberrisk Survey
2. “The Role of the CFO” by McKinsey & Company, 2016. Available at: mckinsey.com/~/media/McKinsey/Business%20Functions/Strategy%20and%20Corporate%20Finance/Our%20Insights/Strategy%20and%20corporate%20finance%20special%20collection/Final%20PDFs/McKinsey-Special-Collections_RoleoftheCFO.ashx
3. “The CFO’s Evolving Role” by Ian Hong, KPMG, August 2017. Available at: home.kpmg/sg/en/home/media/press-contributions/2017/08/the-cfo-evolving-role.html
4. “DNA of the CFO: Is the Future of Finance New Technology or New People?” by Tony Klimas, EY, August 29, 2018. Available at: ey.com/en_gl/advisory/is-the-future-of-finance-new-technology-or-new-people
5. Ibid.
6. “Totaling the Traits of a Top-performing Chief Financial Officer” by Michael Fulton, The Alexander Group, August 8, 2018. Available at: thealexandergroup.com/blog-press-room/2018/totaling-traits-top-performing-chief-financial-officer/
7. “From Bottom Line to Front Line” by Accenture. Available at: accenture.com/t20180910T083815Z__w__/us-en/_acnmedia/PDF-85/Accenture-CFO-Research-Global.pdf
8. “The Future CFO: Less Finance and More Strategy?” by Clare Gascoigne, Raconteur, September 14, 2017. Available at: raconteur.net/hr/the-future-cfo-less-finance-and-more-strategy
9. “The Imperial CFO” by The Economist, June 18, 2016. Available at: economist.com/business/2016/06/18/the-imperial-cfo
10. “10 Career Tips from the World’s Leading CFOs” by EY, May 2017. Available at: ey.com/Publication/vwLUAssets/ey-reporting-10-career-tips-from-the-worlds-leading-CFOs/$FILE/ey-reporting-10-career-tips-from-the-worlds-leading-CFOs.pdf
11. “The Future CFO: Less Finance and More Strategy?” by Clare Gascoigne, Raconteur, September 14, 2017. Available at: raconteur.net/hr/the-future-cfo-less-finance-and-more-strategy
12. The Role of the CFO” by McKinsey & Company, 2016. Available at: mckinsey.com/~/media/McKinsey/Business%20Functions/Strategy%20and%20Corporate%20Finance/Our%20Insights/Strategy%20and%20corporate %20finance%20special%20collection/Final%20PDFs/McKinsey-Special-Collections_RoleoftheCFO.ashx
13. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-evolution-of-the-cfo
14. “From Bottom Line to Front Line” by Accenture. Available at: accenture.com/t20180910T083815Z__w__/us-en/_acnmedia/PDF-85/Accenture-CFO-Research-Global.pdf