Corporate finance executives have jumped to the lead in terms of companiesâ top executives concerned about the magnitude and severity of risks their organizations face in 2020, with economic conditions and regulatory scrutiny their top concerns.
On a scale of one to 10, chief financial officersâ impression of risk faced by their companies in the year ahead jumped to 6.5 from 6.0 in last yearâs survey. That puts them in the lead from fifth place last year, out of seven categories of surveyed executives that comprised board members and six types of C-suite executives. Dr. Mark Beasley, professor and director of the Enterprise Risk Management Initiative (ERMI) at N. Carolina State University, noted that chief audit officersâ assessment of risk also increase noticeably from last year, and chief risk officersâ bumped up slightly, to 6.0 from 5.9.
Chief executives officers and boards of directors instead saw their concerns about risk lesson in this yearâs study compared to last yearâs.
The research was conducted by ERMI and consultancy Protiviti, and co-authored by Mr. Beasley and Ken Thomas, a managing director in Protivitiâs Business Performance Improvement practice. The survey received responses from 825 C-Suite executives and directors in companies across the globe. The top five concerns for CFOs were:
Economic conditions. Although the second concern overall, CFOs marked economic conditions starting to restrict some growth opportunities as their top concern, a big jump from last yearâs survey when it was not even among the top 10 risks.
Regulatory changes and scrutiny. CFOs worry that an emphasis on regulations may increase and noticeably affect the manner in which their companiesâ products and services will be produced or delivered. Mr. Beasley noted that the regulations extend beyond financial requirements to areas such as privacy, with European privacy regulations already in effect and those in California arriving in 2020, and increased government scrutiny of business models such as the big technology firmsâ.
Resistance to change. As innovative technology is deployed at an ever more rapid pace, CFOs are concerned about their organizationsâ ability to embrace that change and remain competitive.
Top talent. Related to the previous concern, CFOs are concerned about their companiesâ ability to attract and retain top talent in a tightening talent market, and consequently their ability to achieve operational targets. âHow does [corporate finance] move from more production-type activities to more machine learning and other artificial intelligence technologies, taking people away from the analytics they used to spend time on and using that talent in the most efficient way,â Mr. Thomas said.
Cyber, of course. Pervasive across companies, cyber-risk concerns keep CFOs awake at night worrying about whether their organizations are sufficiently prepared to manage cyber threats that could significantly disrupt core operations and/or damage the companyâs brand. Mr. Thomas noted that finance departmentsâ increasing use of technology-driven analytics ingests pulls data from multiple sources, heightening the risk. âCompanies are moving to more tech-driven activities and operations that rely ever more on sources of data that can be impacted,â he said.
