Today’s business world is changing fast. Finance functions have to adapt like anybody else by ensuring they prepare for the risks that change can bring. However, McKinsey’s Value and Resilience report concludes that risk management has not kept up with business change. They say risk management is underdeveloped.

So, no matter how resilient you think your finance function is, how can you maintain their strength in an ever-changing landscape?

Stay on top of digital transformation

Don’t stop looking at how you can keep improving and adapting.

Most finance functions that are resilient to change have already kept up with digital transformation. But don’t stop looking at how you can keep improving and adapting.

Decision makers expect faster information and new ways of analysing the company health across integrated platforms. You might have the latest in financial software, but does it allow you to plot your data against other departments, such as the marketing team? This kind of integrated, collaborative approach to digital transformation is just one example of what it takes to keep moving forward.

Predict and expect regulatory changes

Finance rules and regulations change, as does best practice. Auditors expect finance functions to hit higher targets, work smarter and better protect their customer data all the time.

While your team may have hit today’s targets, you never know what kind of change is coming next. By analysing and sensing changes in the regulatory landscape, you can adapt your systems to reflect best practice well before it becomes regulation. This means you’re constantly adapting, rather than standing still until something changes, which involves a huge investment of both money and other resources.

Take a broad view of potential risks

For your finance function, risk comes from all angles. From political change and geographical circumstance, to compliance and many more – it doesn’t matter where the risk comes from, it can have significant impact if an organisation isn’t looking out for it.

In fact, the Australian Government’s Organisational Resilience report asserts that it’s accepting that not all risks can be identified and that risk is to be expected, that makes a team resilient in the first place. However, resilient functions should have an approach to business that means you have a greater chance of recovering from disruption when it does happen.

In practice, this means that finance functions must develop advanced approaches to identify what risks they may face and then develop plans to react and protect no matter the disruption. They must build a line of defence, knowing what resource they’ll turn to when change is needed.

Leaders must have the capability and experience to identify what risk is for their team.

Leaders must have the capability and experience to identify what risk is for their team, business and industry before it arrives. However, those at the centre of the day-to-day operations should also be aware of what’s happening, how they can better protect their practices.

The Australian Government describes resilient teams as “those which have developed their approaches to the management of risk to the point that they have an almost organic capacity to respond to, and even capitalise upon, change whenever it occurs.”

Will your finance function be ready when risk arrives?

Health Check: Do you know the signs of a high performing finance function?

The modern finance function does much more than maintain the numbers. With the right tools, finance functions spearhead strategic analysis for the whole business.

Compliance, funding, risk, growth and innovation – all key elements of a top finance team.  With this health check you’ll know if your team has what it takes to succeed.

  1. How’s your process complexity? Over time, finance function processes can evolve into unnecessarily complex structures. Utilise retrospectives to standardise and streamline these systems. 37% of high performing funcions are also investing in decision support tools.
  2. Are you relying on legacy systems?  Outdated legacy systems hold finance functions back.  53% of high performing teams have a deployment or expansion of ERP software in the next two years.
  3. Does HR know what your goals are?  25% of finance functions believe reporting to other teams is the most difficult aspect of their role.  Foster cross-departmental reporting, regular meetings and align both departments’ goals to keep the teams closer.
  4. Are you neglecting talent management?  61&% of top performers deem talent management more important than other factors – compared to 44% industry-wide.  Rework your recruitment, onboarding and exit processes to create a fluid and flexible finance unit.
  5. Can managers communicate with the board?  Only 49% of senior finance executives rate their capacity to communicate with their boards or managers.  Like with HR, this relationship must be fostered over time through collaborative meetings and goals.

How did you go?  Generally finance functions are exceptional strong in analysis and strategy delivery, providing crucial input into overall business direction.  Yet collaboration and a focus on people remain a thematic weakness.  A healthy, high performing finance function is one that has a plan for everyone it engages with.  What’s yours?

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