Experts say financial executives need to ensure their organizations don’t make a wrong move — and success might mean earning the top job.
Jumping out of an airplane — that’s risky. Rock climbing — also risky. Managing a company — the multitude and variety of risks make the others seem almost trivial.
The risks in management are theoretically shared across the C-suite, but employees and shareholders know that at the end of the day, it’s the CEO who is ultimately accountable. That’s why it was interesting to see a scholarly piece on Knowledge@Wharton, published by the Wharton School of Business, which recently referred to the “CFO imperative” to take on more of the risk management mantle.
“The bottom line is companies today find themselves in an economy where “uncertainty is high, innovations are disruptive, and reinvention is common,” the article says.
“Traditional tools of risk management are no longer enough. These days, forward-thinking firms need to monitor changes to their ecosystem, conduct a deeper diagnosis of competitive challenges, make bold moves at the right time and redesign business models that co-create and reshape the environment, not just be reactive.”
The article goes on to suggest that CFOs think of risks in as holistic a manner as possible. This includes not just examining market volatility or macroeconomic factors but even cyber-threats from hackers. There’s no question that mastering risk management in this way would make CFOs even more valued by their organizations — perhaps even valued enough to get a promotion.
CNBC recently reported on a survey of more than 200 financial executives in the U.K. that showed a whopping 86% have dreams of one day taking on a CEO position. They know they’re in competition with the heads of marketing, sales and even IT, but they believe they have an edge:
According to the survey results, CFOs reckoned they would be ideal candidates for the role due to their knowledge in investor stakeholder management, their economic and business awareness and finance and data-driven business decisions.
This doesn’t specifically mention risk, but the case could be made that excellence in all the areas described above would naturally involve a proven propensity for mitigating or managing them. In fact, data-driven business decision-making is not merely about identifying growth opportunities or cost savings but taking better, more calculated risks to do so.
Even if they don’t land the CEO’s job, CFOs can become role models for risk management that could change the way organizations are run. That’s the real imperative.