Reshaping the CFO Role and Leading Value Creation

If this year’s events are any indication, CFOs will likely continue to face their share of challenges. And while chief financial officers have always had to deal with new—sometimes unforeseen—issues, the very nature of change appears to often be, well, changing. Speed has altered the equation, often leaving little time to make decisions, let alone weigh options. Geopolitical turmoil, for one, has spread lightning fast, forcing companies to act swiftly to try to secure supply chains and, where necessary, pull out of once lucrative markets. Sources of capital have tightened, while the cost of capital itself has escalated. Increasingly, stakeholders and investors are applying pressure on companies to both improve performance and act on climate change. Meanwhile, breakthrough, possibly disruptive, technologies like generative AI seem to be arriving on the scene at a dizzying pace.

These sorts of disturbances have sizeable implications for CFOs. The reality is, the job description for a chief financial officer has expanded mightily in the past few years. Indeed, consider the wide array of board-level considerations that often involve input from CFOs. When CEOs were asked to list the executives most important to their success in a Fortune/Deloitte CEO winter 2022 survey, 66% of CEOs named CFOs as most important.

Figure: Rank order the importance of the following roles, as applicable to personal success as a CEO.

^* Source: Fortune/Deloitte Winter 2022 CEO Survey, CEOs ranked positions in order of importance to their personal success. 66% of CEOs consider the CFO to be the most important.

Deloitte China Vice Chair and China CFO Program Leading Partner Norman Sze states, we understand the significance of staying ahead of the evolving business landscape. China CFO Agenda aims to assist CFOs in navigating market trends through comprehensive analysis of the challenges and opportunities facing corporate finance executives. The seven key drivers discussed in this year are, to varying degrees, front and center for many chief financial officers. In some cases, they are reframing the job itself, pushing finance executives well beyond traditional functional boundaries. With research findings and leading ideas from a global perspective, we hope to provide CFOs with a more comprehensive reference to help them grasp market trends and realize the value of the CFO in times of change.

Seven Key Drivers:

• Value Creation – Addressing a broader set of stakeholders, CFOs need to understand what these constituencies value, as well as also how to measure concepts like brand, trust, and climate impact – future value drivers that are not easily pinned down in a spreadsheet.
• Strategy – To expand their imprint on the company, CFOs need to come under the spotlight. With their long-term vision, narrative ability and strategic thinking, CFOs need to provide input on what a company’s value drivers might be in the long run, and become a thought partner to the CEO, business, and board.
• Talent & Leadership – In the post-pandemic era, to efficiently cooperate with business departments, CFOs need to lead the finance team to improve productivity through intellectual technology, such as developing FP&A skills, and implementing automation and digital technologies for operations.
• Data & Technology – Artificial Intelligence and virtual worlds have been recognized as important drivers of social productivity. CFOs need to consider developing operational strategies related to data resources, actively exploring more efficient and intelligent operating models, and capitalizing on digital technologies to turn information into insight to enhance competitiveness.
• Enterprise Risk & Regulation – CFOs are often responsible for the identification and management of internal and external risks. In addition to economic slowdowns and recessions, geopolitics and inflation, CFOs in China worry more about changes in regulations, digital and technology disruption and currency fluctuation.
• Climate & Sustainability – Global regulators and stock exchanges around the world have been increasing their requirements for ESG information disclosure. The reporting requirement will likely put CFOs in the middle of climate and sustainability issues on which investors and a growing list of other stakeholders may potentially hold divergent views. Awareness of sustainable development among CFOs in China has room for improvement.
• Agility & Resilience – The geopolitical and economic landscape has highlighted the need for agility and nimbleness. While some CFOs have a clear vision of what resilience means, frequent disruptions in industries have led to an increased emphasis on defensive measures, prompting CFOs to broaden their responsibilities to wider cross-business collaboration and value creation.