More NewsFD’s view: predict don’t react

FD's view: predict don't react

As the ICAEW celebrated its 125th anniversary last month, it stood at an historical juncture. In October, its members will vote on whether the organisation should amalgamate with CIPFA.

In some ways this crossroads mirrors the choice faced by all finance
professionals, as regulation and innovation bring a wave of change. One path is,
essentially, to soldier on, to try to minimise the impact on the business. The
other is to evolve, to try to transform change into a positive opportunity for
improvement. Neither route is without its risks.

The job has never stood still, of course. In the past, finance professionals
were stereotypical beancounters. Their role was to balance the books and absorb
themselves in spreadsheets or ledgers. It’s a different story now, as the
finance function has become a respected line of business and most FDs enjoy a
boardroom seat.

All too often, though, finance chiefs are valued for their reflective
abilities rather than their expertise in prediction. But in today’s climate of
increased regulation and closer scrutiny, it’s simply not enough to manage the
previous quarter.

Company growth needs to be balanced with risk analysis – and this needs to be
a forward-looking activity if it is to meet shareholder and regulatory demands.
Today’s FD must not only assess current risks but also predict outcomes.

Accurate, up-to-date information is key to this enlarged role. Organisations
typically have a multitude of information systems, so the notion of instantly
available, reliable data may seem more like a mirage than a business reality.
But it’s not enough for the FD to accept what the system throws up.

Instead the FD needs to drive the systems, not the other way around. While
information is in itself useful, it is the analysis and interpretation of the
data that will mark the difference between the FD of the past and the FD of
tomorrow. Data must be turned into knowledge that will deliver a competitive
edge.

We have two choices: continue to gaze over our shoulders or look forwards. I
think it’s clear where the future lies.

Norman Green is vice-president of finance at Oracle UK, Ireland and South
Africa

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