CFOs: the company’s last bastion against an unstable world

By discussing their situation with CFOs (clients & candidates), one question came up regularly : How do you make the corporate world survive in the real world? This question is less and less theoretical, and answering it is a daily challenge.?

Indeed, conflicts, tensions and elections on a global scale inevitably have repercussions on the way businesses operate. The wars in Ukraine and Gaza, and the attitude of leading companies in their market (boycott or not, suspension of activities, communication) have been closely analyzed.? ?

In this special moment, CFO have a leading role to play. According to 德勤 , geopolitical risk was cited by CFOs as the number one factor likely to pose a significant threat to their business over the next 12 months: cyber-attacks (e.g. crypto jackings, spywares, botnets) escalations within conflicts, inflation and increased protectionism in world trade are, in their view, at the heart of the concerns they must try to master. ?

These questions keep CFOs on their toes. Many of them explain that they don't know exactly how to react, and are dealing with this through a strategy of emergency management, without having the big picture in mind, so omnipresent is unpredictability at the heart of this reality.?

That said, there are strategies that can be put in place to act rather than react:?

• Predict, anticipate and act?

At a time of increasing market volatility and frequent macroeconomic shocks, companies should no longer consider geopolitical risk as an isolated event, but rather make such potential disruptions an inherent criterion of regular corporate strategic planning and forecasting.?

To be more dispassionate in the long term CFOs must learn to subject themselves (and the company) regularly to “what if” scenario planning exercises, in order to predict the level of impact a prolonged crisis would have on cost, purchasing and sales.?

Predicting it is not the same as anticipating it. Of course, CFOs need to do more than just think about the risk: they need to plan for it, in concrete terms, and have a solution ready in case of disruption (cash flow management, change of technology and/or partners, choice of the right insurance cover, provision of internal and external crisis communication).?

• Building compliance serenity?

To solve the problems associated with these crises over the long or short term, they need to be aware of the importance of local collaboration and partnerships, and of the imperative need to work closely with local, state and business regulators.?

Companies must be irreproachable in terms of compliance. This is key to their survival in these crises. The action to be taken, in addition to assiduously developing relations with the entities in charge, will be to set up a solid team on legal and tax issues.?

Through this importance of compliance and legal subjects in general, it will give a real management role (or in any case to have an eye and a decision-making impact) on the legal and tax teams, in their construction and their daily life.?

• Managing risk to make it reasonable?

Annihilating risk is impossible, reducing it is a duty. CFOs can minimize the impact by making judicious choices in the management of their business. For example, diversifying partners, suppliers and/or production sites in different regions will limit risk in the event of war, global economic crisis or other uncontrollable and unpredictable event.?

Geographical diversification of the workforce (having human and operational resources in different locations) can also be one of the keys to a company's survival.?

• Turning the crisis into a vector for change (and growth)?

For companies willing to be agile and adapt quickly to changing conditions, the crisis can be an opportunity for growth. This crossroads leads to two paths: continuing to do what the company has always done, knowing that the risk of the existing situation collapsing is high, or using this period as a catalyst for change.?

This could be through a rethink of the company's value proposition, or a new budget strategy that prioritizes certain business lines over others.?

?Disruption can inspire new ways of thinking and behaving that benefit the business, but it takes time and effort on the part of CFOs to drive this change. The CFO, in this transitional phase, must be a guide who never questions the path and instills momentum.?

CFOs are called upon not just to evaluate data, but to anticipate it and put in place the conditions for survival. They are given the key to transforming a crisis into an opportunity.?

In conclusion, it's clear that the role of the CFO is changing, along with that of the company. Formerly a specialist in financial, accounting and tax matters, the CFO is now becoming the CEO's undeniable right-hand man, the person who will take charge of anticipating and mastering the crisis, as well as planning for serenity. He or she will have to control, master and love more subjects (compliance, legal, human), but his or her zone of influence will be enlarged, and his or her role in the company, in the sector and from a global point of view strengthened.?