CFOs facing an unprecedented range of risks find an edge in analytics

CFOs are adapting to an unusually hazardous business landscape by forecasting with advanced data analytics.

The coronavirus has compelled CFOs to build up resistance — not just to COVID-19 disruption but to other external risks such as cyber attacks, tariff wars and climate change.

The pandemic underscored to CFOs the vulnerability of their companies to the broadest range of external risks in decades, according to financial executives and experts in business technology.

CFOs face the possible spread of COVID-19 variants, fragile supply chains, rising pressure for disclosures on sustainability and extreme weather such as the recent winter storms in Texas. They also need to watch for signs of financial instability from high levels of federal and corporate debt and record fiscal and monetary stimulus.

“We’re in uncharted waters with respect to the size of the risks we face,” according to Barry Keating, co-author of Forecasting and Predictive Analytics, now in its seventh edition. Companies that fail to forecast external threats based on analysis of near- or real-time data “are going to be the ones who don’t exist in the future,” said Keating, a professor at Notre Dame’s Mendoza College of Business.

During the pandemic CFOs have used advanced data analytics to cut costs, tighten cash management and safeguard supplies. For example, detailed analysis of consumer demand and economic growth in several countries is helping automakers adjust their just-in-time production to a severe shortage of semiconductors....

Using a dynamic data dashboard, a CFO can alter the degree and balance of risks based on a range of scenarios and build a strategy for risk management that is comprehensive, forward-looking and timely.


“You need to be able to look at what’s actually going on” across the full landscape of risks, rather than rely on expectations based on internal historical data, according to Sharon Daniels, CEO at Arria NLG, a provider of artificial intelligence that turns structured data into natural language. When it comes to identifying and measuring risks, “there is just no room to be any further behind.”
A data dashboard shared throughout a company breaks down organizational silos and opens the way for “self-serve analytics,” Daniels said. “Your IT department is basically democratizing data.”

Read Jim Tyson's full article in CFO Dive

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