Corporate Performance Management
    The CFO in the post-pandemic restart

    The increasing market volatility and the resulting difficulty in planning, along with the ever-pressing need for updated and reliable information in a short time frame, the proliferation of risk factors to monitor and manage, and the necessary oversight and development of sustainability issues, have over time increased the centrality and complexity of the CFO (Chief Financial Officer) role within a company.

    Moreover, the pandemic crisis has been a further, terrifying accelerator of this process already underway, so much so that, having overcome the most acute phase of resilience to the crisis, it is now necessary to consider how the role of the CFO should be played in the hoped-for restart.

    In doing so, it is important to keep in mind that, if the pandemic leaves behind a world characterized by greater unpredictability, risk, and social distancing, changing the way companies operate, the ultimate goal of any company remains unchanged, which is to create sustainable value over time in light of the risks assumed.

    In essence, the keywords remain value, risk, and sustainability, and it is appropriate to reflect on whether the role of the CFO has changed as a result of the pandemic crisis and what possible consequences can be imagined.

    CFO: key-role in decision-making

    Value means cultivating profitable businesses and generating cash flow through them. To this end, the CFO continues to play a key role, providing reliable information through budgeting and reporting processes for making operational and/or strategic decisions. What changes is the speed at which all of this happens; information is required in increasingly short timeframes and, given the greater uncertainty that characterizes the contexts in which companies operate, it becomes more complex to provide useful estimates and projections for making these decisions.

    Beyond the internal implications, it should also be remembered that poor reliability of financial information provided to external parties places significant responsibilities on the CFO. Therefore, the analytical and traceability of data within the information systems supporting the CFO appears decisive.

    Nor can it be thought that identifying a few measures and focusing on those in planning and control is enough. Certainly, there are summary measures (such as free cash flow, but also measures of profitability) on which objectives are normally assigned to management, but then it is necessary to go deeper to analyze more complex phenomena.

    Furthermore, in the context of a post-pandemic recovery, the CFO’s contribution should not be limited to providing information for someone else to decide, as they could play a valuable proactive, if not propulsive, role in rethinking strategic choices, production processes, work organization, cost allocation in a “zero-based” logic, and all of this thanks to the information that the CFO can draw on firsthand and the overall view of the company processes that they are called to have.

    The CFO as an ally of digital transformation

    In light of what has been described, there is a need for greater reliance on solid planning and control systems in analytical construction and data traceability, while at the same time being quickly adaptable to changing contexts. Similarly, it becomes important to be able to develop business performance management systems useful for defining paths and objectives and measuring their achievement, adapting them over time in line with changing dynamics. In general, the increasing digitization of processes can be a valuable ally for the CFO in a context of often reduced and often distant resources.

    And an ally of Enterprise Risk Management

    But the greatest factor of change is undoubtedly the greater emphasis on risk management due to the increasing volatility and unpredictability of the contexts in which companies operate. In this area too, the CFO – in addition to being the risk owner of some risks, including those related to financial information – also ensures the planning and control of OPEX and CAPEX aimed at mitigating risk consistently with the company’s risk appetite, taking care to avoid periodic phases of cost rationalization, especially if developed with unfortunate linear cuts.

    The CFO becomes a valuable ally – if not directly responsible for this role – of ERM (Enterprise Risk Management) for the purpose of an adequate mapping of risks within company processes and their consequent mitigation through actions taken by risk owners, often responsible for both profit and cost centers.

    In search of sustainable growth

    Lastly, sustainability. Assuming that the “G” point of sustainability is Governance, which is also expressed through budgeting and reporting processes as well as risk management, it should be emphasized that non-financial reporting continues to play a crucial role in achieving sustainable growth in the medium to long term. Certainly, during the worst period of the pandemic, in the phase of pure resilience for companies, the focus on various sustainability issues may have diminished. However, during the recovery phase, these issues become central again, and their management by the CFO remains crucial.

    Risk management, profitability planning and control, especially cash generation (and therefore value), and non-financial reporting are all issues that the CFO must govern jointly and in-depth, quickly and effectively during the recovery phase. To this end, the digitization of administration, finance, and control processes becomes an essential lever to ensure the management of the three corporate pillars (value, risk, and sustainability), especially in a phase of hoped-for recovery.


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