In the globally interdependent marketplace, CFOs need their Organisations to perform well and want to outperform their peers with consistently strong growth and big profits. They want to be superbly agile with change, tenacious with unexpected opportunities and resilient to risk.

Most try to do so by letting their business units and geographies conduct Finance activities according to specialised standards and provincial preferences. But, according to a new IBM study of more than 1,200 CFOs and senior Finance professionals, this is usually the wrong approach.

Rethinking business models, operations and the impact of risk

• Enterprises need to strategically transform their business models and operations to take advantage of a new way of defining a global presence.
• To enable this transformation, financial management models should have necessary flexibility accordingly as the world is undeniably risky. Two out of three (62 percent) enterprises with revenues over US$5 billion have encountered material risk events in the last three years. Of those, nearly half (42 percent) were not well prepared for it.

Successful CFOs are providing the truth and taking a lead in risk management

• Provide "the truth": As truth owner, the CFO can help shape operational decisions and strategic direction. Two actions are essential to providing the truth: "establishing global standards through process ownership" and "simplifying the enabling systems and Organisational structures".
• Managing risk: Findings suggest that enterprises are looking to the CFO for leadership in risk management. Currently, enterprises are struggling to understand their holistic enterprise risk profile. Moreover, the simple risk/reward equation means that all performance is intrinsically linked to risk. Two actions are keys to managing risk: the CFO's orchestration of risk management and the convergence with performance management.

This white paper was published in October 2007.

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