In the present-day scenario, a company can face unanticipated threats without any prior warning. These threats may consist of pandemics, inflation, etc. Therefore, companies must take robust steps to create a management system to safeguard themselves against these unexpected future risks efficiently.
A company’s CFO or the Chief Financial Officer plays a crucial role in planning an efficient risk management plan that would effectively save an organization. A risk management plan is mainly comprised of business continuity management (BCM) as well as enterprise risk management (ERM) that must be well grasped by a CFO. However, one can easily learn these skills with the aid of a CFO certification.
To learn more about CFOs and their role in mitigating risk management let’s dive into this article!
Strategies CFOs Can Take to Mitigate Risk Management
Here are a few strategies that a Chief Financial Officer can incorporate while creating a risk management plan. These strategies have been well elucidated below:
1. Creation of a Strategy
A Chief Financial Officer (CFO) of a company must create a strong risk management strategy that is comprehensible to the other employees, stakeholders, directors, etc. This allows a company to continue with its productivity smoothly even during the time of any unforeseen risk or crisis. These unpredictable problems or crises can be easily resolved with the assistance of enterprise risk management (ERM).
Unpredictable risks have increased in the past five years. Companies whose risk management strategy already included enterprise risk management (ERM) had easily overcome various crises. Therefore, a CFO must note that it is very important to include enterprise risk management (ERM) while creating a risk management strategy.
An enterprise risk management (ERM) plan should be updated periodically for better efficiency. Apart from this, a strong risk management strategy can also display insights that are helpful for making future decisions.
2. Incorporation of a Planning That Includes a Wide Viewpoint
While planning for an efficient risk management plan, a CFO of a company must conduct procedures that will help to gather the various viewpoints of different employees, stakeholders, directors, suppliers, as well as consumers. A planning process assists in identifying the current demand of the consumers and prevents a company from landing into any type of financial trouble. When such a wide point of view is incorporated while making a risk management plan, it eliminates all the blind spots that might hamper the growth of a company.
3. Investment of More Resources for Risk Management
While making the budget a company must invest more of its resources in risk management plans. This will assist the CFOs to work easily without any restrictions and difficulties. If a company does not invest in enterprise risk management (ERM) then they have to face adverse consequences and will not have enough time to enforce a risk management plan.
The absence of a good enterprise risk management (ERM) plan may also create an adverse relationship with the stakeholders during the time of any unpredictable crisis. Subsequently, a company will be required to submit a well-defined risk management plan to the stakeholders.
4. Constant Supervision Against Risks
One of the most important tasks of a CFO is to constantly supervise various risks so that they can be easily avoided. Such risks are detected and eliminated by various artificial intelligence (AI) and machine learning tools. These tools can easily detect risks from accounts that a company might use to pay bills, a common bank ledger, or any account through which a company receives payments or money.
All the machine-learning tools play an important role in scrutinizing all the frauds or risks that are present in the mentioned accounts in a span of a few seconds. On the other hand, AI tools eliminate these frauds and safeguard a company against any risk. These modern-day tools can rapidly detect threats and hence assist the CFOs of various companies by saving their real-time.
5. Hire External Auditor
The CFO of a company must ensure that the company hires an external auditor so that they get an efficient and error-free audit report. This also allows a company to set an efficient risk management plan. Conducting an audit by an external auditor also prevents the possibility of various failures that may take place because of various changes like policies, regulations, operations, as well as employees.
External auditors also assist in finding and deleting all duplicate actions. Therefore, it can spontaneously eliminate the need for requesting as well as clarifying information. By hiring an external auditor a company can rapidly enhance the quality of its audits in no time.
7. Installation of Cybersecurity
The CFOs of various companies should immediately install strong cybersecurity software to protect their companies against various risks. Cybersecurity is a part of vulnerability risk management (VRM) which is essential to defect and eliminate external threats. This also allows the company to monitor all external threats that are present in the assets and assist in eliminating any potential attack against the business or company.
Cybersecurity can also fix exploits by releasing patches. These exploits occur when any new weak devices are added to the network to enhance the quality of the internet. Therefore, CFOs must add cybersecurity software for a strong risk management strategy.
If an individual is planning to become a Chief Financial Officer (CFO) therefore they must know how to plan efficient risk management for a company. This would assist them in acing their career s a Chief Financial Officer (CFO). An online CFO certification would help an individual incorporate all the necessary skills of a Chief Financial Officer.
Imarticus Learning has brought a postgraduate certificate programme in collaboration with IIM Indore for someone who is willing to commence their career as a CFO. This is a course of 151 hours that will take place in hybrid mode only on weekends. Hence, without any further delay get yourself enrolled in this CFO certification programme.