The modern CFO as the guardian of business resilience

By Enzo Tolino, Vice President of Finance, EMEA, Oracle

It’s fair to say the modern CFO has a lot to balance across the business, with disruption and market uncertainty almost the new normal. As a result, reinforcing business resilience is always going to be a prime responsibility of the CFO. But is the focus sometimes a little too narrow, lacking a balanced view of short- and long-term plans, to be truly resilient? 

The real-world ingredients of business resilience 

Recently, McKinsey sought to define the true meaning of a resilient company. When it analysed 1,100 publicly traded organisations during the last economic downturn, it discovered a minority of 10 percent were “materially better” than the crowd. They had three aspects in common that ensured their resilience—and, crucially, their business continuity—in challenging times and beyond.

Firstly, effective empowerment of the finance function was central to this top 10 percent, especially in making the finance conversation more relevant and immediately accessible across the business. Financial experts were embedded throughout the organisation, unlocking previously siloed data to share different values and perspectives business-wide. Ultimately, this meant finance teams were able to shape real-world strategic direction.

Secondly, finance teams actively tested against a wide range of potential scenarios, always striking a good balance between historical (GAAP) analysis and in-depth evaluation of likely future disruption. As a result, the CFO could identify and share clear risk factors with the wider business, allowing the finance function to play that critical role of proactive guardian of the organisation.

The final aspect was about unlocking the full business potential whilst managing the balance sheet at the same time. This was a vital part of the business that the finance team had to get right. Making sure that cash flow was adequate made it possible for the organisation to progress into the future.   

Question your resilience with deeper and wider data-driven business visibility

From this McKinsey study alone, it’s fair to say that clear, actionable visibility goes hand-in-hand with better business resilience. If we dig a little deeper into McKinsey’s three-point definition of a truly “resilient company,” it’s not just about keeping the actual lights on but shining a metaphorical light across the whole business that can empower a proactive finance function.

Which is why it is good to ask yourself—and other key finance professionals—some important questions in order to reinforce resilience in everything your enterprise does. These might include asking how rapidly and cohesively your business can respond to fast-moving events, and also what you can do to help empower your workforce to stay focused and motivated during challenging times.

I’m sure we won’t have all the answers but, as the title of this section suggests, a clear and extensive view across the enterprise will go a long way. This should allow the finance function to dig deeper into more meaningful and relevant insight to identify quick wins that will also reinforce longer-term plans and goals. This can be particularly useful with supporting business-wide scenario planning, such as for proactively monitoring changes across supply chains. After all, if a “just-in-time supply chain” fails, your business is severally challenged.

I think this kind of insight-driven approach should also balance business data with human capital insight, helping the CFO to understand more readily how different parts of the business are reacting to the challenge of change. This can feed into longer term business strategy in areas such as market diversification, to protect business value in changing markets. I’d argue it’s down to the CFO to take the lead here. If the finance function can leverage and utilise new digital technology together with human innovation and help adapt their business to a new way of working, they can then provide an internal “resilient business” with which to support the rest of the organisation. 

Reinforcing resilience is essential, of course, but only as long as it’s balanced with boosting efficiency, performance and purpose at the same time. Please read my latest thinking on how the CFO needs to become the rebalancer of the organisation.

Read more in this opinion piece, “Rebalancing the business: How the modern CFO can galvanise the business against disruption and reach new levels of resilience, efficiency, performance and purpose.”