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The CFO Agenda

Top trends, priorities, and challenges for CFOs

The CFO's agenda would be much easier to manage if the CFO's job description was neatly defined. The reality? It isn't. Chief financial officers' roles are continuing to expand, which means they'll likely have to step outside their finance departments to effectively do their jobs. This can be attributed to issues that are both more complex and more interconnected than they have been in the past. So, what macro-factors are shaping how finance chiefs operate? 

  • Capital markets: Following a long period of cheap money, CFOs now contend with high borrowing costs. Are interest rate cuts coming? If so, when? And how sizable? Lacking certainty, CFOs face a moving target when pricing out possible investments. 
  • Geopolitics: Geopolitical tension has created additional risk and complexity for businesses. Protecting cross-border assets—and maintaining the flow of goods through supply chains—become major challenges when conflicts break out or transit routes get blocked. Not to mention, global trade restrictions have almost tripled in three years. 
  • Demographics: The shift in demographics—aging populations, mostly—is also rising as a CFO priority. Finance chiefs will likely need to address product mixes that satisfy very different customer bases. Business portfolios may need revisiting. At the same time, companies may need to revamp how they serve younger customers. 
  • Technology: It's not clear where businesses will land with breakthrough technologies and their dizzying pace, but it will likely be a different place than they are now. CFOs may need to assume the role of technologist, working with IT and helping C-suite leaders make informed decisions on whether or how to integrate AI into workflows. 
  • Environment: To help position their companies to compete in a low-carbon environment, CFOs will likely factor sustainability into capital allocation decisions. This is hardly a black-and-white decision, however finance chiefs will need to learn how to balance the need to address climate concerns with the need to create value for shareholders. 

This brings us to the CFO Agenda. In putting together this year's version, we looked at how the above macro-factors are shaping the CFO's job on the ground. Ultimately, we identified six key drivers that seem to be top of mind for CFOs:

Drivers of The CFO Agenda

At its most basic level, creating value is a simple equation. Boost shareholder return and you’ve created value. Decrease shareholder return and you’ve created a problem.

But of late, creating value has become more difficult, messier. For one, stakeholders are now fully part of the equation. Indeed, failing to satisfy the expectations of stakeholders in areas like sustainability and equity can lead to customer dissatisfaction, negative press, and more. The dilemma: Investments in climate and equity initiatives may not generate returns that are easily (or quickly) quantified. Building value for stakeholders requires a different lens—one that helps CFOs look beyond stock prices and return on investment (ROI) and next quarter’s results.

This can put CFOs in a tight spot. Stakeholder satisfaction is important, but rewarding investors is paramount. Doing so, however, gets tougher amid geopolitical tensions and macroeconomic turmoil. Despite glimmers of hope—potential reductions in borrowing rates, for one—jitters seem to linger. Many CFOs remain on the defensive, cutting costs and reserving capital. Consider this: In the 1Q 2024 North America CFO Signals™ survey, 60% of CFOs said now is not a good time to be taking on greater risk.

Creating value in a volatile, uncertain, complex, and ambiguous (VUCA) environment puts a premium on a CFO’s ability to reframe—to see things from a different vantage point. Finance chiefs who spot opportunities, who are ready with the necessary funding to finance key strategic acquisitions or mergers, can position their companies for long-term success. Get it right and the payoff may be of a magnitude of order.

That does not mean more risk-averse CFOs will be standing still. Finance chiefs are ideally situated to work with C-suite leaders to reassess their companies’ business portfolio mix. Jettisoning a non-core business—or allocating valuable capital to acquire one that’s a good fit—can reinforce a company’s brand. Shareholders should be kept in the loop, though. Whether results are good or not so good, CFOs will need to tell the story the right way, framing the narrative for investors.

In the meantime, CFOs will have to figure out what to do with advanced technologies. Finance chiefs will likely be asked by boards to weigh in on capital needed to fund technologies like cloud computing and artificial intelligence—and what the payoffs and trade-offs might be.

If lack of talent remains a constant challenge for many functional leaders, the shortfall may be most acute in technology. The gap appears to be particularly true for machine learning and GenAI.

Finance is not immune from this deficit. In our North American CFO Signals 1Q 2024 survey, we asked finance chiefs to name their three biggest concerns about enabling the use of GenAI in finance. GenAI technical skills were cited by 65% of respondents. Another 53% named GenAI fluency. A shortage in GenAI expertise could hamstring efforts to streamline operations and boost productivity.
Even at this early stage, the technology seems to be gradually finding its place in finance. Fully harnessing the potential of GenAI will likely take time, though. Meanwhile, investing in other transformational initiatives could help boost the efficiencies CFOs seek. Allocating capital to process transformation—redesigning AP/AR, connecting siloed data systems, and the like—can increase productivity for finance and reduce costs for the enterprise.

At the same time, finance chiefs should work closely with procurement officers and functional leaders to help ensure that supply chains are both Operational Efficiency & Resiliency efficient and resilient. In addition, building out a more agile finance function may help many companies cope with unforeseen risks. Responding to disruption tends to require a finance function that’s firing on all cylinders, swiftly analysing the threats, modeling potential impacts, and working with C-suite leaders to launch a response.

Cybersecurity is another threat to a company’s daily operations. Certainly, audit committees seem to think so. When CFOs were asked in our 4Q 2023 CFO Signals survey to cite the top three priorities of their audit committees for the next 12 months, cybersecurity topped the list (76%).

For CFOs, cybersecurity responsibilities go beyond reporting material events to the Securities and Exchange Commission. Many finance chiefs and other C-suite executives will likely want to work directly with chief information security officers to get a handle on risks. CFOs might consider sitting on committees that address business continuity plans. One question to consider: How well can you operate during a disruption?

Current labor shortages—particularly shortages of workers with AI skills— seem to have generated a great deal of media coverage of late. Articles often address hypotheticals about the talent models of the future. For CFOs, however, the skills shortage is likely to be of immediate concern.

Many workers want flexible work arrangements—read hybrid—and more work autonomy. But executives at some companies seem to have different ideas on the subject. Indeed, the concept of workers doing their work in their offices has staged something of a comeback.

Nevertheless, hybrid work arrangements appear to have made a place for themselves. In Deloitte’s 4Q 2023 CFO Signals™ survey, 65% of the 124 respondents said they planned to offer a hybrid option this year. Employers who don’t offer a hybrid option could find themselves at a disadvantage. Lack of options might lead to desirable candidates turning down job offers. In fact, in a Deloitte survey (“It’s not a stretch: Gen Z and millennials want flexibility and balance,” June 6, 2023), 17% of Gen Z respondents said they preferred to work fully remotely. Another 26% of Gen Zers indicated they preferred to be able to choose any combination of working onsite and remotely.

Hybrid work raises many questions for CFOs and their C-suite peers. With employees taking greater ownership over how to perform their Talent & Culture jobs, managers will likely want to shift their focus to taking responsibility for outcomes and measuring a team’s progress. In the absence of face-to-face interaction, finance leaders may need to be resourceful in finding ways to assess productivity. Using technology to collect and analyse employee-generated data like email interactions can help, as can trying to formulate useful metrics. But it will be incumbent on leaders to outline the scope and purpose behind what is being gathered—and to get worker approval. Providing employees with details on how monitoring could be helpful (in improving on-the-job safety, for example) could be useful in earning their trust.

Management might also consider the benefits that offline interactions, which can sometimes include mentoring and learning, can offer.

Learning, in fact, may play a key role in fortifying a company’s resilience. In an ever-changing environment, any job description could be outdated as soon as it’s posted. That’s why finance leaders may want to focus on hiring or upskilling employees who have demonstrated an ability to quickly adapt to changing needs. CFOs will need those traits, too. In an era of new and powerful technologies such as AI, a helpful response is neither to be paralysed by fear nor to run headlong into the risks.

A consensus seems to be emerging that GenAI is the next wave of transformational technology. Leaders managing any aspect of any company will likely need to integrate it into their business’s strategy and operations. The key: Start asking the hard questions and look ahead to how GenAI can be gradually deployed in both finance and the enterprise.

Why now? The simple answer could be that not adopting GenAI could put companies at a competitive disadvantage, given its capacity for unlocking new business models, identifying new growth opportunities, and accelerating innovation in products or services. But harnessing GenAI’s capacity for amassing and analysing massive quantities of data is hardly simple—or inexpensive. The challenge for CFOs is identifying opportunities for incremental improvement. It’s a lengthy menu, from streamlining financial planning and analysis (FP&A) to improving forecast accuracy—areas where GenAI can demonstrate a tangible impact on the bottom line. Accumulated GenAI “dividends” can then be reinvested in higher-value strategic opportunities, where ROI may take longer to achieve.

It’s difficult to leverage the full power of GenAI without getting the underlying data in order. For some companies, that may mean creating a centralised repository for the aggregated data from each business unit. GenAI’s nearly insatiable appetite for data can only be fed once standardised data is also AI & Digital Transformation consistent, accurate, and complete. Governance issues over handling the data also need to be in place.

Many CFOs have already begun exploring GenAI. In Deloitte’s 3Q 2023 CFO Signals survey, 42% of the 116 respondents said that their companies were experimenting with GenAI. Implementing GenAI tools for repetitive and manual tasks in areas like reporting can free up finance teams to turn their attention to higher-value tasks.

But before companies can unlock GenAI’s full potential, they will likely have to address issues related to talent, governance, and risk. In the 1Q 2024 CFO Signals survey, 93% of the 116 respondents said that bringing talent with GenAI skills into finance is important over the next two years.

Finance leaders will likely face a host of investment decisions over that same time period, including whether to consider building their own GenAI tool or to customise a vendor-supplied model.

Either way, the risks associated with GenAI—including data privacy, intellectual property issues, and model bias—will need to be managed. “Hallucinations,” wherein GenAI produces inaccurate or nonsensical data, also will require monitoring. Combining AI’s capabilities with human knowledge may be the recipe for faster and more accurate decision-making.

Not that long ago, it was possible for CFOs to believe that geopolitics was no match for the economic opportunity known as globalisation. The kinds of events that affected corporate performance tended to be isolated, like sovereign debt crises or credit risk issues within specific markets. But CFOs increasingly need to be cognizant of the geopolitical dimensions of their decision-making.
Events halfway around the globe can expose companies to a web of risks: strategic, operational, reputational. Given the many interlocking pieces, the full scope of risks can be time-consuming to discern. Embargoes related to such conflicts can lead to pricing uncertainties, a particular concern for companies that use commodities in their manufacturing processes.

Some forms of instability may elude visibility. No sooner had supply chain stresses begun to calm, then major trade lanes in the Red Sea were disrupted earlier this year. Political uncertainty—especially relevant this year, when more than 60 countries will hold elections—could affect capital flows and cross-border dealmaking.

For CFOs and their boards to fulfill their responsibilities regarding risk oversight, it’s incumbent on both to stay on top of changes in regulations and compliance reporting. This year has already brought an array of new or updated disclosure rules on issues like cybersecurity. CFOs of US multinationals need to prepare for Pillar Two, the global minimum tax regime (agreed to by 140 countries under the OECD/G20 Inclusive Framework), implementation of which has already begun in many countries. Phase-in of the rules will continue into 2026, with exact implementation dates varying depending on the jurisdiction.

An effective risk framework can bring more structure to mitigating such issues, effectively integrating geopolitical factors into ongoing risk-management activity. For CFOs, that may mean directing resources toward analytical tools that can provide a picture of how external issues might have an impact on the organisation.

With the growth of increasingly sophisticated AI tools, companies should also be cognizant of the risks associated with the information that the technology relies on to inform decisions. That means establishing guardrails even as companies uncover the technology’s emerging capabilities and risks. At the same time, that also means making accuracy and consistency an even greater priority.

When C-suite leaders and boards look to build resilient operations, the focus often tends to be on more immediate concerns. Supply chains. Liquidity. Cybersecurity. But resilience can also require an aerial view, one that captures a longer horizon. For their part, CFOs should also address a vital question: Will the company be a viable business in years to come?

Climate change—or more accurately, how companies prepare for climate change—will probably be part of the answer. To plan for future sustainability, though, C-suite executives may have to make important decisions right now. For one, they might have to reconfigure operations to compete in a low-carbon environment. In addition, plans may need to be drawn up to make sure facilities can ride out severe weather events.

CFOs will almost certainly be involved in any climate-related discussions. Finance chiefs will need to consider the potential impact of climate and sustainability without losing focus on growth. Some CFOs will also be Climate & Sustainability tasked with addressing a welter of global ESG reporting rules. For example, in the United States, larger filers will be required to disclose material scope 1 and scope 2 climate-related risks. In Europe, the European Union continues to move toward full adoption of its Corporate Sustainability Reporting Directive. Finding the appropriate tools to measure and report on greenhouse gas (GHG) emissions may help with these regulatory obligations. In a Deloitte Global survey of business leaders, including CFOs, 63% of respondents said they always or often consider sustainability and/or climate in capital allocation decisions.

These efforts may help companies reduce their impacts on the environment— and help build trust with stakeholders. But reaching net-zero will be challenging. To get there, some businesses have started assessing and reducing direct GHG emissions. Others have turned to carbon credits. These financial instruments can help a company meet reduction targets.

Like the broader forces at play, these drivers are not isolated items and resist being neatly defined. They, too, are constantly converging and interconnecting. Because of this, the CFO’s job remains an ongoing challenge: To see the whole board—and make moves accordingly. Check out the full report to learn more.

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