The world may be awash in risks, ranging from financial to political to cyber-related, but the most concerning to top corporate finance executives is attracting and retaining talent, according to a recently released study by Protiviti and North Carolina State’s Poole College of Management.
That may not come as a major surprise to NeuGroup members at the level of assistant treasurer and above. In meetings over the last year they have discussed the roles and responsibilities of treasury executives and swapped ideas for retaining talent with a sense of urgency. That’s because most of their treasury departments are relatively small and highly specialized, with often limited opportunity for advancement.
Following talent, the next risks cited by chief financial officers responding to the survey were resistance to necessary business and operational changes, and existing operations and IT unable to meet new challenges. Corporate finance leaders’ perception of these three risks’ urgency jumped significantly from last year’s survey, when they were classified as having a potential impact over the next 12 months. In this year’s survey, each of the scores jumped above a 6.0, indicating respondents see them having a significant impact over the next 12 months.
Jim DeLoach, managing director at Protiviti, said that the CFOs’ concerns about attracting and retaining talent, largely due to a lack of supply, apply across corporate finance.
“Finance functions across corporate America are having a heck of a time making sure they have the right complement of people,” Mr. DeLoach said, noting that talent was among the top five concerns in last year’s survey but “took a huge jump this year.”
The talent challenge is closely tied to third biggest risk, he noted, which is the ability to keep up with the current digital transformation. That, too, has been a major topic at NeuGroup meetings, as members have tackled issues such as their use of robotics process automation (RPA) and artificial intelligence, and how those technologies may transform the role of treasury executives.
“As you start changing strategies and modifying processes to become more digital, that can impact the nature of the skill set corporate finance needs to execute that digital strategy,” Mr. DeLoach said. “So there’s an interrelationship between those two risks.”
The second biggest risk marked by top finance executives was that existing operations and legacy IT infrastructure may not be sufficient to compete, especially against new competitors that are “born digital.” That resistance to change is a predicament assistant treasurers discussed in a November peer group meeting, with one member of noting that cash managers are often especially stuck in their ways and unwilling to adapt to new treasury management systems.
“Treasuries trying to drive change within their organizations to better align fund management and fund flows with changing external financial systems, payment streams, and so forth, might encounter resistance frustrating those efforts,” Mr. DeLoach said.
The fourth biggest risk identified by CFOs, and one that increased from last year to just above 6.0 urgency line, was insufficient preparation to manage cyber risks that could significantly disrupt core operations and/or damage the company’s brand. Mr. DeLoach noted the “SEC Investigative Report: Public Companies Should Consider Cyber Threats When Implementing Internal Accounting Controls,” published Oct. 16. It focuses on business email compromises (BECs), a major concern to treasury, which typically is responsible for addressing the sudden and anticipated requests for funding that the corporate decision makers appear to be making via such emails.
“There are quite a few horror stories in the report,” Mr. DeLoach said, adding, “It was interesting that instead of making examples of these companies and punishing them from a regulatory perspective, the SEC is reaching out to everyone and saying they have to enhance their internal controls.”