CFOs remain divided on the prospects for the economy and continue to see risks from inflation, cybersecurity, generative artificial intelligence and talent shortages, according to a new survey from Deloitte.
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A large proportion of the finance leaders who responded to the survey may be waiting for more tangible, quantifiable, evidence that the economy is on the right track. The CFOs polled rank the economy as the top external risk, while 61% of CFOs cite the economy (growth, consumer demand, etc.) as their leading external risk. However, only 22% ranked interest rates as a leading risk, while 49% cited inflation. Of slightly greater concern were geopolitics and cybersecurity, which each were cited by 50% of respondents.
In terms of internal risks, generative AI adoption topped CFOs' lists of internal risks, with nearly half of CFOs citing lack of GenAI talent and execution risks. Nearly half also named talent (hiring/retention) as a major threat, consistent with trends from previous surveys. Only a tiny fraction of the CFOs polled said now is a good time to be taking greater risks.
Less than one out of five of the finance leaders polled said they find debt financing attractive, probably due to high borrowing costs and uncertainty about future interest rate cuts. Even fewer of the respondents find equity financing appealing.
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Skill sets for succession
Around one quarter of the CFOs surveyed admitted their companies lack a formal CFO succession plan. Traditional finance skills fell to the bottom of the top three skills identified by the CFOs as crucial for their designated successor.
A plurality of CFOs (37%) view operational experience as one of the three most important factors in identifying potential replacements. That was followed by familiarity with new technologies (30%) and network leadership (30%). More traditional financial skills, like accounting (28%) and FP&A (24%), did not make the top three.
The top three actions CFOs plan to take to prepare their successor include: placing them in managerial training programs (43%), working with successors to create a developmental/transition plan (39%), and mentoring/coaching them on how to do the job (39%).
Surveyed finance chiefs believe their ability to explain results to board members in clear simple terms is among the most valued skills by boards when considering a CFO for board membership. The majority of CFOs on corporate boards cite having a larger say in shaping a company's strategy (22%) as the main reason for their interest — another sign of the evolving role of the CFO.
"Modern CFOs are required to stretch across multiple priorities that fall well beyond their traditional reporting and analysis scope," said Steve Gallucci, national managing partner of the U.S. CFO Program at Deloitte LLP, and global leader of Deloitte Touche Tohmatsu Limited, in a statement. "As the business world evolves, CFOs must expand their skill sets to include tech fluency akin to that of a digital native and robust familiarity with the trends shaping their businesses industry. More and more, we are seeing organizations look to folks with operational experience to fill vacancies in the chief finance role."