The role of risk management gains significant importance for CFOs in Southeast Asia
Deloitte Southeast Asia CFO Survey 2013
SINGAPORE, 20 December 2013 – While Chief Financial Officers (CFOs) continue to face a wide range of demands, the role of risk management for CFOs in Southeast Asia is, today, significantly more important compared to 12 months ago. This is according to the Deloitte Southeast Asia CFO Survey 2013, where 72% of the CFOs polled are more involved in risk management from a year ago.
This inaugural Deloitte Southeast Asia CFO Survey is a pulse survey designed to benchmark the thinking of CFOs of major companies in the region. The survey was open for three weeks from 7 October 2013 and was completed by 53 CFOs representing a wide range of industries.
Traditionally, the role of the CFO is one of financial management and operational responsibilities. This evolution of roles in recent times has shifted the focus towards risk management due to the changes in the external and internal environments the organisations face. The survey showed that constantly evolving global regulatory environment (67%) and the increasingly stringent domestic regulations for both statutory and industry-specific reporting (58%) are the biggest factors pushing the companies, and their CFOs, to pay more attention to risk management, and in particular, compliance.
Another factor for the evolving role is the internal shift in companies towards compliance and risk management with over half (54%) of the polled CFOs reporting it as a reason. Consequently, the majority of CFOs (90%) cited regulatory and industry compliance as their top area of involvement in risk management.
There is also a shift, or a desire for a shift, in how CFOs in Southeast Asia would like to spend their time. While Southeast Asia CFOs are spending more of their time in their “operator” and “steward” roles, more CFOs would like to, instead, spend their time as a “strategist” or “catalyst”. 49% of the CFOs polled would like to only spend one day a week as a steward, allowing them to dedicate the rest of their time to be more strategic.
Hugo Walkinshaw, Deloitte Southeast Asia CFO Program Leader says, “While CFOs in Southeast Asia desire to play more strategic roles, the economic situation in the region does not allow for it. Globally, particularly in the United States of America, while Chief Executive Officers (CEOs) expect CFOs to spend over 70% of their time as a strategist and catalyst, most CFOs still cannot achieve this due to compliance and operational issues. This reality is also evident in Southeast Asia, where market forces make it hard for CFOs to minimise their time spent in their role as a steward.”
Top stressors for Southeast Asia CFOs, according to the survey, include concerns regarding compliance, the slowing down of China’s economy and increased competition as companies see costs rising faster than revenues.
Amid the worries however, sentiments of the CFOs in the region are more optimistic (44%) this quarter, compared to the third quarter of 2013. External factors such as positive developments in their industries or markets and internal factors such as their product and services and changes in their operations, financing or assets, play a role in driving this optimism.
Board involvement in risk management has also become increasingly significant in the region, with 65% of the CFOs reporting that their Boards are involved in risk matters that include compliance. While there is a large difference between the Boards’ involvement in the public sector and the private sector (88% and 44% respectively), this is a gap that, in recent years, is diminishing due to increased regulations and reporting requirements.
Says Mr Walkinshaw, who is also an Executive Director of Deloitte Southeast Asia Consulting, “An effective and highly functioning Board must understand and monitor a company’s strategic, operational, financial and compliance risk exposure, and therefore risk oversight, as part of a mindset that is integrated in the culture and work of the Board. As the primary custodian of the company’s ultimate risk capital, CFOs are in the best position to advice Boards on risk appetites, preferences and as a result possible implications.”
“It is positive to see the market sentiment among CFOs in the region on the rise. This optimism however does not come without its concerns. The trend towards a more risk focused outlook will continue to be at the forefront of CFOs’ mindsets in Southeast Asia, and we will not likely see a decline in this approach in the near future.”
Key findings include:
To view the full results and analysis of Deloitte Southeast Asia CFO Survey 2013, please click here.
About the Deloitte Southeast Asia CFO Survey
The survey targets the CFOs of major companies in Southeast Asia. This is the first CFO survey conducted in this region. The survey was open for three weeks commencing 7 October 2013 and was completed by 53 CFOs, representing a wide range of industries.
All participating CFOs have agreed to have their responses aggregated and presented.
Please note that this is a “pulse survey” intended to provide CFOs with bi-yearly information regarding their peers’ thinking across a variety of topics. It is not, nor is it intended to be, scientific in any way. This report summarizes findings for the surveyed population but does not necessarily indicate economy- or industry-wide perceptions or trends.
About the Deloitte Southeast Asia CFO Program
The CFO Program brings together a multidisciplinary team of Deloitte leaders to help CFOs stay ahead in the face of growing challenges and demands. The Program harnesses our organization’s broad capabilities to deliver forward thinking and fresh insights for every stage of a CFO’s career – helping CFOs manage the complexities of their roles, tackle their company’s most compelling challenges, and adapt to strategic shifts in the market.
To find out more about the CFO Program, please click here.