The Evolving Role of the CFO: Revisited

Last year we posted a blog titled The Evolving Role of the CFO: How Finance is Changing in the Modern World. In 2022, this blog gave insights into the expansion of the CFOs responsibilities, from financial reporting to strategic planning, risk management, and guiding the growth of the company. However, the key word here is evolving, which implies continued change. So, a little over a year later, we are revisiting this topic to see in what ways the role of the CFO has continued to evolve and the technologies that are impacting these changes.

AI/Technology

The rise of AI and other new technologies can help with the financial processes of the CFO. Generative AI can help streamline and automate repetitive tasks while the CFO focuses on their increasing responsibilities. This technology can be highly beneficial for efficiency and reduction of human error, but does not compete with the value of the CFO in analyzing, interpreting, and strategizing with the data this provides them with. By cutting out these monotonous tasks, the CFO’s attention can be on processes in which they are vital.

However, this is not the only way that these technologies alter the role of the CFO. The CFO also must monitor the use of AI, including when and where they should invest, where it is saving their company money and time, how government regulations surrounding AI are developing and changing, and the communication with departments and other executives about its use. While technology can improve the efficiency of the CFO’s tasks, it also adds additional responsibilities and considerations to their role.

Economic Uncertainty/Rapid Change

As we mentioned in our previous blog, much of a CFO’s job has become predicting, strategizing, and advising. However, with prolonged market instability, this becomes increasingly difficult. Predictive models and forecasting are more important in this uncertainty, but they can also be more challenging to make accurate. These rapidly changing and increasingly unclear times are putting a lot of pressure on CFOs – as well as on companies to make sure they have someone qualified to handle it in the position. 

Cultivate Talent

Another responsibility that falls on CFOs is cultivating talent in their financial team. With this increased pressure, it is even more critical for CFOs to surround themselves with the right mix of skills. This means CFOs need to find the right talent in the hiring process and be open to both mentoring and learning from those around them. In the face of a talent crunch, this is no easy task. However, attracting and retaining financial talent is essential for the company.

ESG Issues

Environmental, social and governance (ESG) issues continue to dominate the list of priorities for business leaders. The prioritization of these issues has primarily fallen on CFOs recently. Monitoring investments into these matters and the values of their audience and shareholders are additional considerations in financial planning and strategizing that they must take into account. The importance of a company’s focus on these issues varies between demographics and can be a balancing act for the CFO.

Wide Variety of Skills/Well Rounded

The skill set that CFOs need to bring to the table continues to evolve and expand. As responsibilities are added to the role, the skills required to execute them so too must follow. As shown in an infographic from the Journal of Accountancy, along with financial skills, a CFO should also have business skills, such as leadership and sensemaking; people skills, such as anticipation and serving evolving needs; leadership skills, such as communication and storytelling; digital skills, such as integration and collaboration; and the agility to think strategically and critically and synthesize intelligence to insight. As  Mark Mason, CFO at Citigroup, puts it in an article for Fortune, “I like to think of myself as a well-rounded CFO. I’ve held strategy roles. I’ve held finance roles. I’ve held CEO roles. And I think having done all of those things, makes me a more effective CFO.”

While many factors from our 2022 blog have remained relevant, there are also many new considerations for CFOs. The role of the CFO is continually evolving and broadening; our expertise and services at TCOBI can help you stay on top of it.