CFOs are more worried about 2020 risks than others in the C-Suite: study.
Corporate finance executives are leading the pack in terms of company executives most worried about the magnitude and severity of risks to their organizations in 2020, according to a study by the Enterprise Risk Management Initiative (ERMI) at North Carolina State University and Protiviti.
On a scale of 1-10, with 10 being most concerned, chief financial officers’ impression of risk faced by their companies in the year ahead jumped from last year’s survey, up to 6.5 vs. 6.0 last year, putting them far ahead of their fifth-place slot last year. This is out of seven categories of surveyed executives made up of board members and six types of C-Suite executives.
Dr. Mark Beasley, professor and director of the ERMI, noted that chief audit officers’ assessment of risk also increased noticeably from last year, and chief risk officers bumped up slightly as well to 6.0 from 5.9. Meanwhile, chief executive officers and boards of directors saw their concerns about risk decrease in this year’s study.
The research was co-authored by Dr. Beasley and Ken Thomas, a managing director in Protiviti’s Business Performance Improvement practice. The survey received responses from 825 C-Suite executives and directors in companies across the globe.
The top five concerns for CFOs were:
- Economic conditions. CFOs saw economic conditions starting to restrict growth opportunities as their top concern, a big jump from last year’s survey when it was not even among the top 10 risks.
- Regulatory changes and scrutiny. CFOs worry that an emphasis on regulations may increase and noticeably affect the manner in which their companies’ products and services will be produced or delivered. Mr. Beasley noted that the regulations extend beyond financial requirements to areas such as privacy, with European privacy regulations already in effect and those in California arriving in 2020, and increased government scrutiny of business models such as the big technology firms.
- Resistance to change. As innovative technology is deployed at an ever more rapid pace, CFOs are concerned about their organizations’ ability to embrace that change and remain competitive.
- Top talent. Related to the previous concern, CFOs are concerned about their companies’ ability to attract and retain top talent in a tightening job market, and consequently their ability to achieve operational targets. “How does [corporate finance] move from more production-type activities to more machine learning and other artificial intelligence technologies, taking people away from the analytics they used to spend time on and using that talent in the most efficient way,” Mr. Thomas said.
- Cyber, of course. Pervasive across companies, cyber-risk concerns keep CFOs awake at night worrying about whether their organizations are sufficiently prepared to manage cyberthreats that could significantly disrupt core operations and/or damage the company’s brand. Mr. Thomas noted that finance departments’ increasing use of technology-driven analytics ingests pulls data from multiple sources, heightening the risk. “Companies are moving to more tech-driven activities and operations that rely ever more on sources of data that can be impacted,” he said.
