The finance function is a cornerstone to the business’s response to a crisis, from understanding workforce impacts, customer’s ability to pay, supply chain issues and impacts, contractual obligations, finance availability to stock market movements.

Whilst the pandemic has been one of the biggest business shocks in recent memory; it’s fair to say that business disruptions are increasing in both frequency and severity. From fuel shortages to global weather and environmental disasters, disruptions have caused billions of pounds worth of damage in the past few years.

In fact, McKinsey has created a scoring system for classifying disruptions based on impact, lead time and frequency of occurrence. Anything from catastrophes to data disruptions and everything in between.

McKinsey.com. 2020. Risk, resilience, and rebalancing in global value chains. [online] Available at: https://www.mckinsey.com/business-functions/operations/our-insights/risk-resilience-and-rebalancing-in-global-value-chains.

Disruptions are costly events and can be divided into two categories: anticipated such as trade disputes, and unanticipated such as data breaches, product recalls, logistics disruptions and industrial accidents.

Across industries, resiliency has risen to the top of the C-Suite agenda, to both more deeply understand the implications and implement a more robust management approach and deliver organisational resilience. The role of the CFO has changed, they are expected to play a more strategic role across the organisation, work closely with different departments to understand priorities and develop plans utilising various financial scenarios based on uncertain trading conditions.

The office of the CFO has become the nerve centre for all strategic planning, given the number and frequency of financial models required. The CFO must respond quickly and strategically to any crisis, that’s in addition to the changing regulatory and compliance landscape.

The CFO is in a unique position in that they must balance identifying opportunities for growth and expansion, all while managing risks to the organisation. By setting up a SWAT team, supported by a strong decision-making framework, the organisation is best placed to accelerate out of a period of disruption towards growth.

The pandemic, and other recent disruptions have triggered fundamental shifts in how organisations get work done and finance plays a key role in how they must adapt to new challenges and opportunities. Finance leaders can have more impact in key areas of the business. By leveraging their insight, they can help the organisation navigate a crisis or take advantage of missed opportunities.

An organisation designed for speed and agility, supported by an effective decision making, will see powerful outcomes, including greater customer responsiveness, enhanced capabilities, and better performance, in terms of cost efficiency, revenues, and return on capital.

Not everything that can go wrong, does go wrong, but companies need to be prepared and cannot afford to be caught out when shocks occur. The recent pandemic is a stark reminder that whilst outlier risks may be rare, they do occur and should be factored into decision making.

It’s becoming clearer that now is the time for CFOs and finance leaders to embrace the evolution of their roles and reassert themselves as strategic partners to the organisation.

Changing consumer behaviour drives business change

In addition to dealing with business shocks, organisations have had to deal with a massive shift in consumer preferences over the past few years. Demand and preferences for products are now evolving, and safety concerns, economic uncertainty and a continued focus on sustainability have led consumers to realise that there are many things they can do without, and a few they can’t.

Consumers rapid shift to online shopping as well as the shift to working from home has driven a large-scale digital transformation. This digital shift has forced companies to evaluate or even transform their business models. Consumer brands have traditionally been able to rely on historical data and performance trends to forecast the future of the business.

Now, disruption and quickly changing market conditions has turned retail planning on its head. To meet these customer expectations and win in the market, retailers must anticipate and adjust to rapid shifts in demand, supply, as well as changing customer sentiment and expectations.

For further information, including how a finance crisis checklist, download our finance resilience whitepaper

Our next blog will explore why organisational resilience requires both agility and speed and steps to consider.