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Credit Management

Risky Business: The changing role of finance

By CreditMan Thursday, November 3, 2016

By Tim Vine, Leader of Risk Products at Dun & Bradstreet

The world of business is constantly moving and being disrupted. As a result employee positions have to adapt to fit organisations’ changing needs. Roles are typically not what they once were. We are seeing new roles created every day; ten years ago for instance, companies didn’t have CDOs or COOs, and now companies cannot do without them. The role of the modern financial decision maker has also evolved dramatically. The CFO in particular has transformed from “financial engineer” or “number-men” in the 1990s, to “super controller” in the wake of Sarbanes-Oxley, to the more recent “strategic CFO” which is now where we stand.

As part of this development, financial decision makers are now increasingly focused on ‘risk management’. However, this has led to a perception in the business that the CFO is characterised by constant caution and insufficient risk-taking: essentially a ‘red light’, acting as a brake on fast growth.

But businesses need more. The financial decision makers’ new remit is now, quite simply put, to drive growth. This is a huge challenge in a demanding global landscape. Organisations today face increased financial risk, and we are seeing rising cases of bankruptcy and fraud with businesses struggling to achieve steady and significant growth largely due to economic and political uncertainty. But the “new” financial decision maker must understand that, in a highly competitive business environment where digital allows start-ups to compete with conglomerates, growth sometimes means taking risks.

Financial decision makers, from CFOs to finance directors, need to assess and make bold decisions on the risks and opportunities – balancing the need to avoid bad risks with acceptance of smart risks – or rather, maximising working capital, and minimising bad debts. They need to use that knowledge to give sales teams the ammunition needed to win new business and grow. Long gone are the days of being a ‘function’ of the business, the financial decision maker is now its beating heart and can lead the business to new heights.

The pressures of a financial decision maker that we see today are very different to those felt just a few years ago. The modern financial decision maker must have three core characteristics: financial steward, a value creator, and a value accelerator. As a result, they need to have the right tools, insights, and expertise to ensure their customers fulfil this role.

If businesses have the right tools to plan their strategy, and assess and manage credit risk, they can make smart, insight-based decisions that will drive them forward and fuel growth. This is where data can be used to unlock business opportunities, helping financial decision makers identify areas - from countries to product lines - for profit, or areas that pose a risk.

Data should mean opportunity but if financial decision makers fail to make sense of it, they will never realise their role as gatekeeper to growth. For that reason, it is essential that in their evolving roles that they are equipping themselves with the right tools to give them as much information as possible to make smart and informed decisions. Financial decision makers must be fearless and take smart risks. A “road-block” has no place in modern business.