We’ve been looking back over 2023 here at CFO Brew, and, if anything, this year’s been a reminder of just how much a CFO’s job is handling risk: Supply chain risk. Climate risk. Cybersecurity risk. Labor risks. Macroeconomic risk (looking at you, Powell).
I’ve learned a lot about risk since I started here in April, and two of my top three takeaways for the year deal with it. The third is the way in which CFOs are addressing the accounting shortage. (I suppose I could say it’s about “talent risk,” but I didn’t want to stretch things.)
The economy is harder to predict than the weather. Recently, I got to engage in some amateur economic analysis while writing an article about how the holiday shopping season might turn out for retailers. I spoke with an economist, combed through earnings calls, examined inflation data from the Department of Labor, and looked up consumer confidence surveys. At the end of it all, I wrote that the data pointed toward a “muted” holiday season. I felt very smart.
Then I started seeing headlines like this.
But it’s some consolation to know that even the experts have been caught off guard this year. September’s healthy jobs report surprised analysts. And the recession we were all predicting got downgraded to a “soft landing.”
CFOs have to deal with this kind of thing every day, only their predictions have much higher stakes. Data analytics software and talented staff can help, but, still, their task is daunting. They’ve got to prepare for a variety of scenarios while remaining nimble enough to deal with unexpected events like cyberattacks, strikes, supply chain breakdowns, and natural disasters. My hat is off to them.
ESG is not just for tree-huggers. In general, I’m a proponent of ESG, and I view climate disclosure regulations as an important step toward mitigating climate change. (I know not everyone agrees with me.) I also recognize they can place a burden on companies, who need to invest in staff and systems to collect and report ESG data.
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But this year I was surprised to learn just how much having solid ESG fundamentals can benefit companies. And not just in terms of public image, either. It can be an important contributor to financial value during deals; attract customers, talent, and investment; and lower costs.
Conversely, ESG weaknesses can harm companies. Survey after survey shows that investors back out of deals with companies that have poor ESG record —not because the investors are kombucha-drinking hippies, but because they understand that ESG problems = risk. Companies that are weaker on ESG may have shaky supply chains or present compliance risks, BDO’s Jim Clayton and Matt Segal told me.
CFOs may have the answer to the accounting shortage. Before coming to CFO Brew, I worked for a leading accounting association. I thought I knew all about the accounting shortage and the reasons fewer young people were entering the profession. But hearing from CFOs—many of whom, despite current trends, have accounting backgrounds—broadened my perspective.
CFOs told me that the new generation of young accountants is different: They’re less interested in “paying their dues” by performing dull, repetitive procedures for years before they get to the good stuff. They want to think critically, be challenged, and feel connected to their companies’ missions. And automation—once bemoaned as something that would make accountants obsolete—can help them to do so.
But tech alone is just part of the solution. Accounting and finance staff like, well, pretty much everyone else, want to feel valued at work and earn salaries comparable to their peers’. Employers who view early-career accounting work as a gauntlet of long hours and high pressure will have trouble retaining talent. Fortunately, many CFOs recognize the importance of employee engagement.