CFOs’ universe has grown bigger and diverse. Gone are the days when their world revolved around financial gatekeeping, acting as head of accounts and managing data. CFOs of today need to wear many hats and work more closely with their CEOs.
But to be an invaluable partner to their CEOs, they must bring to the table certain competencies, on top of performing the traditional roles expected of them. Above all else, they must possess high levels of technical competence and integrity given the utmost good faith and trust stakeholders put in the CFO, said Mr Damien Sullivan, Regional President, ACE Asia Pacific.
Understand the levers of business
Ideal CFOs understand the levers of the business: they can analyse data and anticipate probable outcomes, spot opportunities or challenge their colleagues before issues arise, said Mr Geoff Riddell, Chairman, Asia Pacific & Middle East and Africa, Zurich Insurance Group.
A CFO, he said, also needs to be an effective communicator, translating complex data in a way a broader audience can understand and relate to. “It’s what the CFO says that investors listen to.”
Do the main job well
Mr Kevin Strain, President, Sun Life Financial Asia, expects his CFO to do the core role well: providing strong and effective financial oversight and ensuring financial reports are accurate and meet the highest standards. Identifying cost efficiencies and helping control expenses across the organisation also form part of the job.
“The CFO also has a big role to play in helping the organisation manage its risk – in particular financial risk – so having a CFO who has broad knowledge and deep understanding of the business is key,” he said.
Up in the hierarchy
Illustrating how important the CFO is in his company hierarchy, Mr Sullivan said the CFO is part of the executive team – at group, regional and country levels – and must have both an understanding and influence across all areas of the business.
The CFO is very important in Zurich’s hierarchy, said Mr Riddell. “The CFOs’ role in providing confidence in the numbers is essential, but so is their interpretation of those numbers as well as critical issues such as solvency management and maintaining liquidity,” he said.
Besides being the “conscience” of the business, the CFO is also its guardian, someone who flags potential issues and opportunities and gives the CEO advice based on his/her knowledge of the business and analysis of the numbers, said Mr Riddell.
Key in formulating strategy
At Sun Life Financial Asia, the CFO is key in helping the company develop its strategic plans for its businesses across the region, in setting its financial targets, as well as in tracking the performance of its financial goals throughout the year.
“CFOs are more than just a source of information and analysis; their role is at the heart of formulating company strategy,” said Mr Strain, adding that they also work in close partnership with the Chief Actuary.
“Both have unique but complementary skill sets, and when they work together well, it can be very powerful for getting a full financial picture of the business.”
CFO advice is critical
One critical role of the CFO is in the areas of M&As and business investment, where his/her advice and decision are considered indispensable. “Their experience in understanding the levers of the business, their analysis of the numbers and their understanding of the macroeconomic environment give them a unique perspective in strategic discussions,” said Mr Riddell.
There is no other way to practice sound enterprise risk management but to include the CFO, along with other key senior management, in strategic decision-makings, said Mr Sullivan. “We take a ‘whole company’ approach to strategic planning because all parts of the business are important. The CFO is no different in this respect.”
Speak up when there is a risk
Across the financial services industry, the CFO’s licence to intervene has grown in recent years, partly because of the uncertainty created by the financial crisis. Investors look to the CFO more now for assurances about the health of the business, said Mr Strain.
“It remains the preserve of our CFO to intervene on any matter that impacts upon the financial health of the business – and as you can imagine, that’s quite a wide remit,” he said.
CFOs should always speak up when they feel uncomfortable or see financial risks on the horizon, said Mr Sullivan. A good CFO will have the trust of his/her colleagues and is likely to be involved in the solution rather than be seen as interfering, he said.
Keep up with expanding role
The role of CFOs has indeed gone through transformation as the milieu of the insurance business becomes more complex and demanding. To keep up with their expanding role, they need to constantly lend a reliable hand to their CEOs and not just wear many hats – but wear them well as well.
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“The CFO is both an adviser and a ‘financial filter’ for all information within the company. With so many new regulations, increased compliance, risk management, etc, it is critical that the CFO can interpret all parts of the business into what that means financially.”
Mr Damien Sullivan
Regional President, ACE Asia Pacific
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“The CFO is the CEO’s right hand as well as the conscience of the business, with two clear responsibilities. The first is to ensure robust financial processes and controls to ensure confidence in the numbers. The second, and of equal importance, is to provide analysis and insight for the CEO regarding the performance of the business.”
Mr Geoff Riddell
Chairman, Asia Pacific & Middle East and Africa, Zurich Insurance Group
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“As a chartered accountant myself by background, I fully appreciate the value of the CFO – we talk the same language and come to things from a similar perspective. Our CFO provides an excellent sounding board for our strategic decisions and gives us a good understanding of how our financial goals are able to align with our company’s strategic goals.”
Mr Kevin Strain
President, Sun Life Financial Asia
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