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The Future of the CFO: From Number Cruncher to Value Driver

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Future of the CFO

Future of the CFO: From Number Cruncher to Value Driver

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In today’s fast-paced business landscape, a company’s chief financial officer (CFO) is more integral to operations than ever. In fact, about 41% of CFOs spend the majority of their time on non-finance related activities, fueling data-driven decisions across the business.

The only problem? Leaders outside of finance still see CFOs contributing the most value in traditional finance areas, such as accounting and controlling.

Today’s infographic from Raconteur explores the expanding scope of CFO responsibilities, as well as the perception gap between CFOs and non-finance leaders when it comes to the former’s primary value-driving activities.

The CFO’s Expanding Role

Traditionally, the CFO was focused on financial reporting and issues such as compliance, accounts, and taxation. However, the scope of a CFO’s duties has increased dramatically in recent years. Thanks to technological advances, CFOs are now able to access massive amounts of data on their organization’s operational and financial performance.

“This puts the finance function at the heart or, arguably, the mind of the business from the outset, with many now being crowned as the ‘stewards’ of the long-term enterprise vision.”

Robin Bryson, Interim CFO at Impero Software

Armed with data, CFOs can help predict headwinds, forecast performance, and make informed decisions across departments. In a global survey, McKinsey asked finance leaders about the breadth of their responsibilities. Of the CFOs who said they spend they a majority of their time on non-finance tasks, here’s where their attention is focused:

Activity% of CFOs Focused on Activity
Strategic leadership46%
Organizational transformation45%
Performance management35%
Capital allocation24%
Big data and analytics20%
Finance capabilities18%
Technology trends5%
Other (e.g. risk management)5%

However, other business leaders remain in the dark about this broader role.

Differing Views

While the CFO’s job description has evolved considerably, outside perceptions of it have not. In a survey of both CFOs and non-finance leaders, there is a clear difference of opinion with regards to where financial leaders create the most value:

Areas in which CFOs have created the most financial value% of CFOs who agree% of others who agree
Performance management39%19%
Strategic leadership39%25%
Traditional finance roles33%47%
Organizational transformation33%21%
Finance capabilities30%15%
Speciality finance roles30%27%
Cost and productivity management26%42%
Support for digital capabilities and advanced analytics15%10%
Mergers and acquisitions (including post-merger integration)14%23%
Capital allocation10%22%
Pricing of products and/or services10%8%
Management of activist investors3%3%

CFOs see their largest contributions in the areas of performance management and strategic leadership, while others still consider the CFO’s value to be derived primarily from traditional finance and cost/productivity management.

How can CFOs demonstrate their increased responsibility to leaders outside of the finance realm?

Closing the Gap

According to McKinsey, CFOs can demonstrate their expanded role in three main ways:

1. Actively head up transformations.

While CFOs are already playing a role in transformations, non-finance leaders are less likely to perceive them as making strategic contributions. CFOs also tend to initiate the most transformations in the finance function alone.

To change perceptions, CFOs can lead enterprise-wide transformations, and communicate their strategic value through activities like high-level goal setting.

2. Lead the charge towards digitization and automation.

Few organizations have initiated the shift in a substantial way, with only ⅓ of finance respondents saying their companies digitized or automated more than 25% of their work in the last year.

However, the payoff is well worth the effort. Among those that have undertaken this level of change, 70% reported modest to substantial returns on investment.

3. Develop talent and capabilities across the organization.

CFOs have begun increasing their value through talent-building, but there is still a significant amount of room for further growth.

For example, CFOs can build capabilities during transformations, teach financial topics to non-finance leaders, and develop top talent across the organization.

Through these various strategies, CFOs can foster collaboration and understanding between departments—and succeed in their broader roles.

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Business

How Powerful is Your Passport in a Post-Pandemic World?

Ranking the the world’s most powerful passports based on access to visa-free destinations. Where does your country fall on the list?

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How Powerful is Your Passport in a Post-Pandemic World?

With COVID-19 cases falling in many parts of the world and vaccination programs ramping up at warp speed, international travel no longer seems like a distant dream.

The Henley Passport Index, which has been regularly monitoring the world’s most travel-friendly passports since 2006, has released its latest rankings and analysis.

The most recent data provides insight into what travel freedom will look like in a post-pandemic world as countries selectively begin to open their borders to international visitors.

Prominent Countries Still Holding Strong

The rankings are based on the visa-free score of a particular country. A visa-free score refers to the number of countries that a passport holder can visit without a visa, with a visa on arrival, or by obtaining an electronic travel authorization (ETA).

Without considering the constantly changing COVID-19 restrictions, Japan firmly holds its position as the country with the strongest passport for the 4th year in a row.

This positioning is based on exclusive data from the International Air Transport Association (IATA)—with Japanese passport holders theoretically able to access a record 193 destinations from around the world visa-free.

The last time Japan didn’t hold the number one position was back in 2017, when it shared the 5th spot with countries like the United States, New Zealand, and Switzerland.

Rank (2021)CountryVisa-Free Score (2021)Rank (2011)Visa-Free Score (2011)
1🇯🇵 Japan1934170
2🇸🇬 Singapore1929164
3🇩🇪 Germany1912172
3🇰🇷 South Korea19110163
4🇫🇮 Finland1901173
4🇮🇹 Italy1903171
4🇱🇺 Luxembourg1903171
4🇪🇸 Spain1904170
5🇦🇹 Austria1896168
5🇩🇰 Denmark1891173

Singapore remains in 2nd place, with a visa-free score of 192, while Germany and South Korea again share joint-3rd place, each with access to 191 destinations.

Throughout the 16-year history of the Henley Index, EU countries have maintained a dominant position in the passport strength reports. Finland, Italy, Luxembourg and Spain all hold the 4th position while Austria and Denmark round up the top 5 with a visa-free score of 189.

CountryRank (2011)Rank (2021)Difference
🇺🇸 United States57-2
🇨🇦 Canada990
🇲🇽 Mexico29236
🇬🇧 United Kingdom37-4
🇧🇷 Brazil25178

The United States and the United Kingdom jointly share the 7th position with a visa-free score of 187 destinations. Canada, Mexico and Brazil hold the 9th, 23rd and 17th positions respectively, with Brazil experiencing a significant jump of eight places over the last 10 years.

Editor’s note: Visit the Henley Passport Index site for a full list and ranking of all countries around the world.

The Countries With The Least Travel Freedom

Afghanistan continues to be the country with the least amount of travel freedom, coming in last place (110th rank) with a visa-free score of 26 destinations. Iraq, Syria, Pakistan and Yemen have access to slightly more visa-free travel, but still linger at the bottom of the overall ranking.

Rank (2021)CountryVisa-Free Score (2021)Rank (2011)Visa-Free Score (2011)
110🇦🇫 Afghanistan2610124
109🇮🇶 Iraq2810028
108🇸🇾 Syria299337
107🇵🇰 Pakistan329931
106🇾🇪 Yemen339139

The latest report indicates that the gap in travel freedom is now at its largest since the index began in 2006. Japanese passport holders can access 167 more destinations than citizens of Afghanistan, who can visit only 26.

The Biggest Gainers In a Decade

Over time, small annual moves in the Henley Passport Index can make a big impact—and in the last decade, countries like China and the UAE have been the biggest movers:

China has risen by 22 places in the ranking since 2011 by going from a visa-free/visa-on-arrival score of 40 destinations to now 77.

The most remarkable turnaround story on the index by far, however, is the UAE. In 2011, the UAE was ranked 65th with a visa-free score of 67 destinations. Today, thanks to the Emirates’ ongoing efforts to strengthen diplomatic ties with countries across the globe, it is now ranked 15th with a remarkable visa-free score of 174 destinations.

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The Biggest Business Risks in 2021

We live in an increasingly volatile world, where change is the only constant. Which are the top ten business risks to watch out for?

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The Biggest Business Risks Around the World

We live in an increasingly volatile world, where change is the only constant.

Businesses, too, face rapidly changing environments and associated risks that they need to adapt to—or risk falling behind. These can range from supply chain issues due to shipping blockages, to disruptions from natural catastrophes.

As countries and companies continue to grapple with the effects of the pandemic, nearly 3,000 risk management experts were surveyed for the Allianz Risk Barometer, uncovering the top 10 business risks that leaders must watch out for in 2021.

The Top 10 Business Risks: The Pandemic Trio Emerges

Business Interruption tops the charts consistently as the biggest business risk. This risk has slotted into the #1 spot seven times in the last decade of the survey, showing it has been on the minds of business leaders well before the pandemic began.

However, that is not to say that the pandemic hasn’t made awareness of this risk more acute. In fact, 94% of surveyed companies reported a COVID-19 related supply chain disruption in 2020.

Rank (2021)% ResponsesRisk NameBusiness Risk ExamplesChange from 2020
#141%Business InterruptionSupply chain disruptions
#240%Pandemic OutbreakHealth and workforce issues, restrictions on movement
#340%Cyber IncidentsCybercrime, IT failure/outage, data breaches, fines and penalties
#419%Market DevelopmentsVolatility, intensified competition/new entrants, M&A, market stagnation, market fluctuation
#519%Legislation/ Regulation ChangesTrade wars and tariffs, economic sanctions, protectionism, Brexit, Euro-zone disintegration
#617%Natural CatastrophesStorm, flood, earthquake, wildfire
#716%Fire, Explosion-
#813%Macroeconomic DevelopmentsMonetary policies, austerity programs, commodity price increase, deflation, inflation
#913%Climate Change-
#1011%Political Risks And ViolencePolitical instability, war, terrorism, civil commotion, riots and looting

Note: Figures do not add to 100% as respondents could select up to three risks per industry.

Pandemic Outbreak, naturally, has climbed 15 spots to become the second-most significant business risk. Even with vaccine roll-outs, the uncontrollable spread of the virus and new variants remain a concern.

The third most prominent business risk, Cyber Incidents, are also on the rise. Global cybercrime already causes a $1 trillion drag on the economy—a 50% jump from just two years ago. In addition, the pandemic-induced rush towards digitalization leaves businesses increasingly susceptible to cyber incidents.

Other Socio-Economic Business Risks

The top three risks mentioned above are considered the “pandemic trio”, owing to their inextricable and intertwined effects on the business world. However, these next few notable business risks are also not far behind.

Globally, GDP is expected to recover by +4.4% in 2021, compared to the -4.5% contraction from 2020. These Market Developments may also see a short-term 2 percentage point increase in GDP growth estimates in the event of rapid and successful vaccination campaigns.

In the long term, however, the world will need to contend with a record of $277 trillion worth of debt, which may potentially affect these economic growth projections. Rising insolvency rates also remain a key post-COVID concern.

Persisting traditional risks such as Fires and Explosions are especially damaging for manufacturing and industry. For example, the August 2020 Beirut explosion caused $15 billion in damages.

What’s more, Political Risks And Violence have escalated in number, scale, and duration worldwide in the form of civil unrest and protests. Such disruption is often underestimated, but insured losses can add up into the billions.

No Such Thing as a Risk-Free Life

The risks that businesses face depend on a multitude of factors, from political (in)stability and growing regulations to climate change and macroeconomic shifts.

Will a post-pandemic world accentuate these global business risks even further, or will something entirely new rear its head?

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