The CFO'S Perspective

Uncertainty, a term frequently mentioned by business leaders today, essentially refers to business risk - an area CFOs often focus on. Let's delve into the various types of risk a business may face.

Last year had been dubbed The Year of the Controller by financial recruiters because demand for the position dramatically increased amid uncertain economic times and increased accounting needs at many organizations. This year has seen continued interest in the role and there is no indication that the buzz around the Controller role is slowing down, which means that going into 2024 many companies are still inquiring about how a Controller differs from a CFO (Chief Financial Officer) and how a Controller can benefit their organization.

The collapse of Silicon Valley Bank (SVB) was a sudden jolt to the banking system. SVB was a leading financial institution founded in 1983 that catered to the tech industry. This unexpected development has had far-reaching consequences, particularly regarding risk evaluation for Chief Financial Officers (CFOs) tasked with assessing and mitigating potential risks within their organizations.

I am pleased to note that First Citizens Bank (Nasdaq: FCNCA) announced on March 27, 2023, that it entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to purchase all of the assets and liabilities of Silicon Valley Bridge Bank, N.A. The transaction is structured as a whole bank purchase and assumption agreement with loss share coverage. Silicon Valley Bank is now a division of First Citizens Bank.

While the acquisition of SVB by First Citizens is a successful one, there are lessons to be learned from the original event. In this article, I will explore the fallout, identify the emerging risks, and discuss what I think it means for CFOs as they navigate an increasingly complex risk landscape.

In early July it was released that Amazon had fallen victim to a fraud scheme perpetrated by one of its Operations Managers, Kayricka Wortham, at its Smyrna, Georgia location. In just 19 months, Wortham managed to steal almost $10M before getting caught.

How did this happen?

If you’re wondering whether your company needs to switch to a rolling forecast, it’s important to look at why you’re asking. The simple act of questioning whether your current budgeting process is sufficient likely indicates that you have identified a shortcoming in your current budgeting process that provides an opportunity for improvement. Moving to a rolling forecast may offer benefits over your existing methodology, but it’s important to understand the pros and cons associated with using a rolling forecast and what to be aware of when considering switching budgeting methods.

There is no doubt that hiring in accounting and finance right now is harder than ever before. And yet, despite today’s challenges, companies still need CFOs, which means that simply going without a CFO is not an option.

So, how do you overcome today’s hiring challenges to win the talent war? When you are hiring a CFO, it is going to be important that you focus on finding someone that meets all of your most critical needs first, before trying to check any boxes on your wants list. While this may seem like obvious advice for organizations that are keenly aware of the difference between their wants and needs for the role, many companies struggle to draw a distinction between the two. To complicate matters, what may be a need for one organization might be a want for another even if both are in the same industry or business stage. Even within a single organization what may have been considered a nice-to-have the last time the role was vacant could very well be a must-have this time around.

Let’s take a look at some of the criteria that organizations use to determine their needs and wants when hiring a CFO:

Whenever I read about a company embroiled in accusations of fraud, my first thought is, "Where was the CFO?" As I've written, risk mitigation is a critical element of the CFOs' responsibilities. What could be riskier than being an officer of a company engaged in fraudulent activities?

Much is written about embezzlement or malfeasance, generally carried out by a single individual with access and need. While these cases can run into significant amounts of money, they are nothing compared to systemic fraud that the entire executive team of a corporation may carry out.

Key Performance Indicators (KPIs) help measure the performance and effectiveness of different areas within a company. KPIs are very specific to each industry and company. The best KPIs will depend on the company's specific goals and objectives. In a manufacturing context.

Here are some widely used KPIs: