Accounting For The Future: Why CFOs Need Predictive Powers – Forbes

“In the next five years, game-changing technologies will transform every business process, including how we sell, market, communicate, collaborate, educate, train and innovate.” This statement by Daniel Burrus, futurist, business strategist and author of The Anticipatory Organization: Turn Disruption and Change Into Opportunity and Advantage, may startle some, but I think his assessment of the future for accounting and finance is accurate. Transformative change, of a kind last seen in the form of widespread industrialization at the turn of the last century, is upon us, and CFOs who understand the magnitude of this change are actively working on upskilling their people for their next core competency: anticipating the future.  

I was reminded of all this during the IMA (Institute of Management Accountants) Annual Conference and Expo (ACE) this year, which featured a session by renowned futurist and NYU Professor Amy Webb, founder of the Future Today Institute. Webb’s expertise is in helping organizations think differently about future trends and what they need to do to address them. Crucially, this futurist approach involves looking at issues that are not traditionally considered under the purview of the finance function, such as climate change, emerging technologies and “black swan” events like the Covid-19 pandemic.

Any of these issues could fundamentally disrupt a company’s supply chain, workforce or consumer base within an extremely short period of time, rendering any projections based on current profits and consumer growth expectations utterly moot. Webb challenged finance and accounting professionals to consider what macro trends could impact their performance, and to more actively engage in anticipatory thinking, factoring in the unexpected to their short- and long-term planning.

The unexpected as a category is rather broad, so rather than discuss all the possible singularities, I want to focus on three key areas where CFOs will have to concentrate their powers of prediction: technology, risk management and sustainability. Technology is constantly evolving, and while we know that artificial intelligence (AI) and robotic process automation (RPA) are already part of many finance teams’ processes, CFOs need also to focus on emerging technologies like smart glasses with additive and diminishing reality capabilities and mesh networks built by personal devices with quantum computing power.

The impacts of technologies like these are manifold and finance teams (as well as HR, operations and IT professionals) will have to quickly weigh what the cost of implementation may be (including choosing not to implement, which may have consequences in terms of an organization’s competitive advantage).

With each new technology organizations adopt comes heightened risk. The vulnerabilities of the digital age came into clear focus during the Covid-19 pandemic, when many organizations shifted entire staffs to remote work. This shift turbo-charged cyberattacks, which appear in the news with ever more frequency. CFOs are now on the frontlines of mitigating these risks, with cybersecurity increasingly falling under their purview.

To assist CFOs with this new accountability, the Committee of Sponsoring Organizations of the Treadway Commission (COSO), on which I sit, issued guidance on “Cyber Risk in a Digital Age,” and the topic is often discussed in the accounting and finance trade press. True to the statement I included earlier from Daniel Burrus, CFOs will have to better anticipate which technologies are best suited for key business objectives, but also, crucially, manage their deployment and oversight to prevent potentially catastrophic breaches.

The last of the three areas where CFOs need to build an anticipatory mindset is sustainability, which I see as encompassing what John Elkington has termed “the triple-bottom line,” namely an organization’s need to take into consideration people, planet and profit when making key business decisions. Sustainability implies that organizations seek to minimize their environmental impact in pursuit of long-term profitability. For instance, if climate change is contributing to droughts and flooding, a soft drink manufacturer may have a vested interest in lowering their carbon footprint and reducing emissions so that they have access to a clean and plentiful water supply for making their product.

I see this as perhaps the most urgent area for CFOs to address. The breadth of potential issues arising from climate change is causing CFOs to think outside their traditional financial stewardship role into the realm of sustainability stewardship and future strategies.

Futurists like Daniel Burrus and Amy Webb have much to teach finance and accounting professionals. While hindsight and oversight were the activities we felt most comfortable performing, today our roles have shifted to include the additional “lines of sight” of insight and foresight. Some have gone as far as referring to the “CFO” as “Chief Futures Officer.” In any case, as our world grows more complex and volatile, the CFO can evolve to become both a strategist and a futurist.