Asia-Pacific has been a dynamic spark in a global economy hit by persistent inflationary pressures. The International Monetary Fund expects the region to contribute around two-thirds of this year's global growth. That said, various external and domestic factors weigh on the economic outlook.
Amid this complexity, businesses are likely to look to the CFO as a source of information and insight. CFOs are expected to provide their company insightful guidance during economic uncertainty. Beyond finance’s typical function of checks, balances and compliance with wide-ranging regulatory requirements, these leaders must now consider evolving factors such as ESG and disruptive technology. They must have the capacity to consider evolving factors when addressing questions on business survival, growth, funding, risk management, and much more.
It’s more than a numbers game
CFOs are no longer just responsible for ensuring the integrity of the numbers, financial controls and reporting. In the current environment more than ever, CFOs are stepping into the role as highly collaborative, cross-functional leaders who must combine technical rigour with macro strategy.
To fit this shift into expectation, CFOs must now understand processes across functions at a deeper level to connect the dots, thereby building the ability to speak to any part of the business and value chain with strategic insight. A CFO we spoke to described it as transitioning from being a jack of all trades and master of none to a “master of all”.
An example would be how CFOs must now factor in ESG in meeting the evolving expectations of regulators and broader stakeholders. New ways of viewing value have created a focus on the holistic cost of ownership rather than looking at cost in isolation. This calls for the stewardship of the CFO to ensure the seamless integration of ESG initiatives into key business metrics.
Uncertainty calls for agility
Beyond firm decision-making ability, open-minded learning is a core quality that the CFO needs in the face of uncertainty. One CFO exemplified this when she posted a COVID-19 FAQ on her investor relations webpage, gathering responses to learn more about shareholder concerns during the pandemic’s turbulent uncertainty.
This feedback loop enables a blend of learning and anticipatory thinking that discovers flaws and provides insight into contingencies. Another CFO whose team modelled four cases for return to work during the pandemic further highlights the importance of how leaders can adapt and react more quickly.
Enabling agility with technology
Adaptability determines whether technology becomes a disruptor that aggravates uncertainty, or a tool to navigate an unfamiliar situation. Adaptable CFOs can quickly shift priorities to create new finance practices and ways of working, which maximises the potential of innovation aids such as data analytics, automation, and emerging financial technologies for data-driven decisions.
To tap into the potential of technology, one CFO brought in data scientists to create a “single source of truth”, turning many data streams into robust conversations that inform strategic decisions.
However, CFOs we have spoken to in Asia cited a delay in adopting such technologies compared to their Western counterparts. There remains a semantic gap between business leaders and technology experts, with CFOs sometimes struggling to understand how technology can help. In contrast, technology experts can struggle to articulate how technology resolves business issues.
This is where first-time CFOs may have an edge over veteran leaders. The next generation of CFOs can bring a digitally native approach that drives efficiency with innovation.
Openness is the way forward
The increasing emphasis on leadership beyond numbers calls for CFOs to manage ambiguity and spearhead change in their decisions to avoid being passively carried by the ebbs and flows of the economic cycle.
Uncertain times provide learning opportunities that the agile CFO can take advantage of. Agility comes from combining short-term firefighting (survival decisions) with long-term disruption mitigation (future proofing of business models). It requires the CFO to examine the entire value chain of the business, forecast dynamically, eliminate biases and be a true business partner to the CEO to steer the company forward.