The DNA of the CFO

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In EY’s first DNA of the CFO study, conducted in 2010, the role of the CFO had broadened to encompass not only traditional financial skills, but also more strategic and market facing responsibilities. This latest research -- conducted from December 2015 to February 2016 and including 61 life sciences respondents among the 769 overall respondents-- shows four forces that continue to transform the face of finance leadership: digital, data, risk and uncertainty, and stakeholder scrutiny and regulation.

Key findings

CFOs at both the global and sector levels indicate they are challenged to focus on strategic priorities because of increasing operational responsibilities (51% and 48%, respectively). They need to build their understanding of digital, smart technologies and sophisticated data analytics, and they believe that risk management will be a critical finance capability in the future.

Yet, despite these similarities, there are notable differences. While 52% of global respondents indicate they are unable to focus on strategic priorities by delegating responsibilities because of a lack of necessary skills in the finance team, only 42% of life sciences respondents say this is the case. Similarly, there is a 10 percentage point difference between global and life sciences respondents (64% vs. 74%) in the number of CFOs who are being increasingly asked to take on wider operational leadership roles beyond finance. Finally, while a strong majority of both sets of respondents anticipate increasing responsibility for the ethics of decision-making, the percentage is significantly higher for life sciences respondents (77% vs. 71% globally).

EY - Key findings

CFO as operations leader

64% of global respondents report they are increasingly being asked to take on wider operational leadership roles beyond finance vs. 74% of life sciences respondents. And many life sciences CFOs welcome the broader range of responsibilities. However, there are downsides. One important element of the CFO’s role has always been impartiality. As CFOs get more heavily involved in operations, they risk compromising this detachment. Also, almost half say that increasing operational responsibilities are interfering with their ability to focus on strategic priorities.

Risk management as a critical finance capability

Global organizations, but particularly those in life sciences, are challenged by a rapidly changing risk landscape. Today, almost half of life sciences CFOs spend more time providing analysis, such as strategic risk assessments, than they did five years ago. As they continue to navigate a volatile risk landscape, 61% of life sciences CFOs believe that risk management will be a critical finance capability in the future.

EY - Risk management as a critical finance capability

Cyber risk is of particular importance to life sciences CFOs, especially since 61% of life sciences organizations still do not have a cybersecurity role or department that focuses on emerging technology.

With a treasure trove of highly sensitive and valuable intellectual property and an increased reliance on digital data for business, cybercrime events can be extremely damaging to life sciences companies.

It is not surprising that 58% of finance leaders believe they need to build their understanding of digital, smart technologies and sophisticated data analytics to deliver against their critical strategic priorities. It is also equally critical that CFOs understand the cybersecurity that protects their organizations’ most valuable data assets and systems.

Highly sensitive and valuable intellectual property, combined with an increased reliance on digital data for business, make cybercrime events ever more damaging to life sciences companies.

The need to shine under stakeholder scrutiny

For life sciences CFOs, managing stakeholder relationships has become increasingly challenging as they seek to juggle the requirements of regulators with the demands of investors and other stakeholders. By effectively managing these relationships, organizations can collaborate with regulators and help shape policy. 61% of life sciences CFOs also believe the future finance function needs to improve its regulatory knowledge to keep abreast of a changing and uncertain regulatory playing field.

The ethics of decision-making

Within life sciences, there are a number of pressure points that could expose companies to ethical lapses. Having a clearly defined “purpose” for the organization — an ultimate objective that goes beyond financial goals — helps provide a framework for ethical decision-making. In this survey, 77% of life sciences finance leaders agree that they will increasingly be responsible for the ethics of decision making in support of the organization’s purpose.

Mastering the future

Digitization, data, stakeholder scrutiny and risk volatility are changing the rules of the game for finance leaders. The impact of these disruptions is seen in the increasingly diverse DNA of finance leaders worldwide, with an accepted definition of the CFO role increasingly difficult to pin down.

CFOs, like all leaders, need to adapt to this increasing complexity, focusing on the attributes and skills that their companies will need to succeed in the future. They need to have a clear view of their own competencies, the role they want to play in strategy and the major disruptions that offer threat and opportunity.

To read more from our DNA of the CFO - life sciences report, click here to download the full report pdf. For more from our global report, go to ey.com/dnaofthecfo.