Asian CFOs Step up Risk Management Role

While Southeast Asia’s chief financial officers (CFOs) continue to face a wide range of demands, their role in risk management is becoming significantly more important according to the
‘Deloitte Southeast Asia CFO Survey 2013’
.

The poll, conducted in the third quarter of 2013, found that 72% of the 53 CFOs polled had become more involved in risk management than a year earlier.

The survey notes that the CFO’s role has traditionally been one of financial management and operational responsibilities, but the focus has shifted towards risk management in recent times because of the changes in the external and internal environments their organisations have faced.

The survey found that constantly evolving global regulatory environment (67%) and increasingly stringent domestic regulations for both statutory and industry-specific reporting (58%) were the biggest factors pushing the companies, and their CFOs, to pay more attention to risk management, particular in terms of compliance.

Another factor for the evolving role is the internal shift in companies towards compliance and risk management, with 54% of the polled CFOs reporting it as a reason. Consequently, 90% cited regulatory and industry compliance as their top area of involvement in risk management.

“While CFOs in Southeast Asia desire to play more strategic roles, the economic situation in the region does not allow for it,” said Hugo Walkinshaw, Deloitte Southeast Asia CFO programme leader. “Globally, particularly in the US, while chief executive officers (CEOs) expect CFOs to spend over 70% of their time as a strategist and catalyst, most CFOs still cannot achieve this due to

compliance and operational issues.

“This reality is also evident in Southeast Asia, where market forces make it hard for CFOs to minimise their time spent in their role as a steward.”

Top causes of stress for Southeast Asia CFOs include concerns regarding compliance, the slowing down of China’s economy, and increased competition as companies see costs rising faster than revenues. However, 44% of CFOs in the region were more optimistic than in Q312. External factors such as positive developments in their industries or markets and internal factors such as their products and services and changes in their operations, financing or assets play a role in driving this optimism.

Board involvement in risk management has also become increasingly significant in the region, with 65% of CFOs reporting that their boards were involved in risk matters that included compliance. While there is a large difference between the boards’ involvement in the public sector and the private sector (88% and 44% respectively), the gap has been diminishing in recent years because of increased regulations and reporting requirements.

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