Widely acknowledged finance expert and McKinsey alum, Tim Koller, astutely remarked, "The role of the CFO is immensely complex, strategic, and integral to a company's success in the modern economy." As businesses navigate the complexities of today's ever-changing economic climate, the Chief Financial Officer's (CFO) importance extends beyond the realms of financial reporting and analysis—they are now pivotal strategic decision-makers.

For effective implementation, take a look at these CFO best practices:

• Strategic CFO (27-slide PowerPoint deck)
• Chief Financial Officer (CFO) Toolkit (188-slide PowerPoint deck)
• Business Analytics for the CFO Function (72-slide PowerPoint deck and supporting PDF)

The Evolving Role of CFO

The role of the CFO has greatly transformed in this digitized, fast-paced business environment. More than just a financial overseer, the modern CFO wears various hats—strategic planner, risk manager, and even an innovation catalyst. According to a recent McKinsey Global Survey, around 88% of respondents declare the CFO's role has broadened over the past five years.

The CFO as a Strategic Planner

A fundamental shift in the CFO's role is the transition from being predominantly concerned with numbers and spreadsheets to a more Strategic Planning emphasis. CFOs are now expected to identify potential growth avenues and shape strategy development that aligns with the organization's overall mission and vision. Through their unique understanding of the company's financial health and market opportunities, they actively contribute to devising actionable steps in pursuit of the company's long-term objectives.

Explore related management topics: Strategic Planning Strategy Development

The CFO as Risk Manager

Beyond strategic planning, CFOs are now pivotal to effective Risk Management. In PwC's annual Global CEO Survey, about 70% of top business leaders believe that it’s harder to gain and keep trust in this digital, technologically advanced era. It is now incumbent on CFOs to keep investors' trust by providing detailed, up-to-date, and accurate financial reporting. Simultaneously, it involves ensuring regulatory compliance while identifying and mitigating potential financial, compliance, operational, and reputational risks.

Explore related management topics: Risk Management

The CFO as Innovation Catalyst

Finally, as an unexpected but much needed touchpoint of innovation, the CFO serves as an Innovation Catalyst. A report from Accenture emphasized how 85% of high-performing finance leaders believe that capturing ideas from all levels and successfully identifying and enabling strategic tech investments are crucial to success. CFOs actively engage in fostering a culture of innovation, which may encompass exploring and investing in FinTech, embracing digitization or Big Data, promoting value-creating initiatives, and financially empowering Innovation pursuits.

Explore related management topics: Big Data

New Skill Sets for the Modern CFO

The transition from traditional duties to a more strategic role necessitates new skill sets. The modern CFO must be:

• Analytical: As stewards of company data, CFOs must be adept at analyzing complex financial and operational data, yielding actionable insights.
• Visionary: CFOs are required to have a long-term strategic viewpoint, envisioning the business's growth trajectory and proposing steps to get there.
• Risk Savvy: CFOs must identify and assess possible risks and devise strategies to minimize their potential impact.
• Digitally Literate: With the increasing role of technology in finance, understanding and leveraging digital tools for business growth becomes absolutely essential.
• Communication Skillful: CFOs should communicate effectively with team members and stakeholders, bridging the gap between complex financial jargon and business acumen.

As the business landscape continues to evolve, so will the CFO's role. Outperforming their peers will require CFOs to go above and beyond traditional responsibilities, embracing their strategic, risk management, and innovation-focused responsibilities. With the right mindset and skill set, CFOs can significantly contribute to the overall performance, growth, and value creation of their organizations.

Explore related management topics: Value Creation