CFOs confident to take on more risk, engage in digital disruption: survey

CFOs confident to take on more risk, engage in digital disruption: survey

About a third believe now is a good time to take greater risk onto their balance sheets, according to Deloitte

With concerns over the economy in China and the United States abating, as well as strong balance sheets and cash flows, CFOs are more confident to take on more risk and help deliver growth in their organisations, according to Deloitte’s latest Quarterly CFO Survey.

The research and consulting firm surveyed 70 ASX300 CFOs between 12 March and 1 April 2013 and found about a third believe now is a good time to take greater risk onto their balance sheets. This was up from 14 per cent six months ago and is the highest level reported by the Deloitte survey in almost two years.

“The optimism of CFOs has jumped substantially since the last quarter. It’s gone from a net eight per cent to 24 per cent, which is quite a big jump,” said Keith Skinner, chief operating officer at Deloitte Australia.

“Certainly they are prepared to take on more risk. That doesn’t mean to say they are still not mindful of monitoring the risk, but there’s more opportunity for growth and to make investments.

“It’s coming off [the back of] a number of years now where growth hasn’t really been available because of the economy and there has been a real focus on improving efficiency, productivity and cash flow. What they [CFOs] are saying now is, ‘We have got that in check and that’s actually going quite well, we’re efficient and profitable. We now have to return our focus to growth as the opportunities arise’.”

The top focus for most CFOs over the next 12 months is organic growth (66 per cent), according to the survey. Skinner said many organisations are starting to engage in digital disruption and realise they have to change traditional operating models to keep up with the needs to their customers - for example, digitising products and services.

“I could talk from my own business, Deloitte. The accounting profession is being disrupted in a number of areas,” Skinner continued. “One example is a big move to doing accounting in real time in the cloud. That means us having online capability with real-time interactions with clients particularly in the middle and private company markets for processing transactions and providing management information.”

“We are also utilising offshoring and other processes to maximise efficiency. That’s a big difference from a traditional accounting model where we have our people go out to clients to process information. Our visits are now moving to more focused on providing advice.”

The Deloitte survey also found a third of CFOs predict their business will hire more staff in the coming year, compared to almost a quarter who foresee a reduction in headcount.

Skinner said finding staff that can help guide and lead strategies around digitisation is important for organisations facing uncertainty around how digital disruption impacts their business.

“When you look at both what’s happening in the finance and economic markets and what’s happening in the business through technology and the speed of change, I think just leads to the conclusion that we’re in probably permanently now quite an ever-changing market,” Skinner said.

“It’s going to be very hard to predict with certainty like we could in years gone by. The real challenge is to get preparedness by being agile, being able to quickly [respond to] change and changing market conditions.”

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Tags risk managementeconomyfinanceDeloitteQuarterly CFO Surveydigital disruption

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