Risk and finance transformation – Special report 2019
In a bygone era of financial services, chief financial officers (CFOs) had roles that tended not to land them in the spotlight. But the troubles that plagued financial companies in the early part of the century have CFOs completely shifting gears.
New regulations, accounting standards and advances in areas such as big data analytics have seen these important financial figures work much more closely with their chief risk officer (CRO) counterparts on such areas as risk management and front-office businesses. Unsurprisingly, CFOs tend to come more and more from risk management backgrounds as as the role increasingly requires attention to P&L and balance sheet.
International Financial Reporting Standard 9 and the Current Expected Credit Loss standard forced banks to do just that – consider accounting and regulatory standards in unison, which in turn shone the spotlight on CFOs and CROs, whose unique ability to tackle these new challenges gave them much more decision-making power.
Reliance on data has not come without its downsides. Using models to measure risk has already opened up firms to losses and is unlikely to end any time soon, while the increased cost associated with maintaining and adding to the data available is an additional cost that many firms are still coming to grips with.
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