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How does today’s CFO adapt to risk in the digital world?

12 May 2020

CFOs the world over are out of their comfort zone. That the CFO role has changed is no doubt, but have they changed their attitude to risk? Some argue that today’s CFO must be all things to all people or a jack of all trades if you like – change managers, marketeers, IT gurus. The weight of the digital revolution and big data sits heavy on their shoulders.

Coming from finance and deciding on which technology to place your bet with can be mindboggling. CFOs wake up each day in a world where they are forced to readdress their approach to risk, because the finance department’s traditional role of reducing risk may, ironically, cost them commercial advantage. The job has never been tougher. Or more exciting. 

Say yes to risks and generate revenue 
Data analysis allows the modern CFO to take a different attitude to risk, allowing him/her to see things they could never see before. Carl-Åke Nilson, who co-founded the challenger bank SevenDay and is currently CRO at BNP owned Express Bank, says the success with SevenDay was based on it. “You can say that risk is about prevention, how to say no. For me risk is about seeing opportunities to do business.” Effective data analysis allowed him to open up the market. A skillful and informed approach to risk allows businesses to say ‘yes’ more often, generating revenue. Gaining the insight that even, say, 1% of people or organizations previously deemed uncreditworthy are in fact safe to trade with can make a massive difference to the bottom line. 

 

“The big shift is from what you think is the truth to what really is the truth”

Per Stubberud Lieng

 

Per Stubberud Lieng’s building supplies company Gausdal Landhandleri has a vast customer base, meaning one of its highest risks is credit. But better use of data has allowed Gausdal Landhandleri to develop a proactive approach that has seen them launch automated instant credit online, giving the company 24-hour sales and bringing them closer to their customers. “The big shift is from what you think is the truth to what really is the truth,” he says. The company is the leading user of data in its industry and Stubberud Lieng is another advocate of bringing influence to bear across functions, with data analytics in logistics and marketing as well as risk allowing Gausdal Landhandleri to differentiate itself in a highly competitive market. 

 

“Marketing and risk are two sides of the same coin, we do the same job” 

Carl-Åke Nilson

 

Nilson at SevenDay has a similar outlook. “I have been in risk for some 20 years and I see that finance, marketing, HR tend to form their own islands,” he says. “But you need to cooperate. Marketing and risk are two sides of the same coin, we do the same job.”  

Be proactive with confidence
Skillful use of data can help when changing your attitude to risk, allowing CFOs to be far more proactive than they’ve ever been by being able to peer into the future with more confidence. It allows conventional thinking to be challenged from much more solid ground. At the challenger bank Aprila, co-founder Israr Khaargues that with data it is all about your perspective. “Understanding what happened yesterday does not create value, does not drive the bottom line or revenue. You need to find a way to look forward, he says.  

How today’s CFO can adapt his/her mindset to thrive in a fast-moving world  

  1. Embrace uncertainty 
  2. Break down silos 
  3. Change your attitude towards risk 
  4. Break down big tasks 
  5. Look further ahead 
  6. Be brave to help create the resources for change 
  7. Make creative friends 

Explore each of the above steps more in detail and 
Read here

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