The CFO 411: Spotting the Possibility in a Pessimistic Market

Interconnected global network

Interconnectedness became the word of the week, as a sharp decline in Chinese trade caused the International Monetary Fund to trim the global growth outlook yet again. The cut, which cast a pessimistic pall over the first day of the World Economic Forum in Davos, has sparked talks of softer consumer demand in the U.S. and an area-wide recession in Latin America. When news also hit that the Dow Jones industrial average plummeted 250 points on Wednesday, analysts were quick to ask: Is this the start of a long-awaited bear market? Yet not all financial leaders are content to merely wait for an answer. Here are the stories, sound bites and stats you need to know to proactively move your business forward—potential slowdown be damned.

4 Need-to-Know Headlines

1. IMF Again Cuts Global Growth Outlook

Plummeting oil prices, the effect of weak commodity prices on emerging markets, and a sharp slowdown in China have caused the IMF to cut its global growth forecasts for the third time in less than a year. On Tuesday, the fund forecast that the world economy would grow at 3.4% in 2016 and 2.6% in 2017, both years 0.2 percentage points lower than estimates made last October. The IMF also reduced its forecast for U.S. growth by 0.2%, pointing to a lag in manufacturing and low oil prices hindering capital investment. (via Bloomberg)

2. Modern CFOs Embrace Actionable Data

The total cost of financial reporting is climbing for most enterprises, as new regulations, personnel challenges, and reporting complexities emerge. Some CFOs see their role evolving right along with the financial landscape, as they shift into strategists and data mavens. In fact, accurate, actionable data topped the list of financial reporting priorities for the modern CFO, according to a global association of senior financial executives. (via FEI.org)

3. Study Traces the Trickle-Down Effect of Good Leadership

Could robust engagement and ace communication skills among financial leaders translate to better morale and acumen among a company’s rank and file? Statistics suggest so. When examining 256 pairs of high-level managers and their direct reports, researchers found that great leadership increased engagement not just for managers’ employees, but also for those employees’ employees. That performance boost could mean a competitive edge. The challenge for CFOs is to not get mired down in data, but instead harness its power to tell stories and shape strategy. As one VP told Forbes, “Companies often have access to the same information. It’s the speed and simplicity of tools with which they can harness it into actionable insights that disrupts their competitors.” (via HBR.org and Forbes.com)

4. The IASB Brings Leases Into the Light

Calling all controllers! News that the International Account Standards Board released a new accounting standard, called the IFRS 16 Lease, is raising eyebrows and heart rates across accounting departments. The new standard requires all leases to be reported on a company’s balance sheet as assets and liabilities, and is expected to most impact the energy, healthcare, IT, telecom, airline, retail, and transport industries. The move is intended to bring “much-needed transparency” to balance sheets, make it easier to compare company financials, and prevent lease financing from “lurking in the shadows,” the IASB chair explained. (via Forbes)

The Stat: $700,000

That’s the award amount the U.S. Securities and Exchange Commission recently appointed to an industry expert for providing analysis that led to enforcement. It’s the first time since the SEC’s whistleblower program was established in 2011 that a company outsider has been awarded. Industry experts expect the news to encourage more outsiders to come forward with actionable intel. As one lawyer told the Wall Street Journal: “Now companies will have a greater appreciation for the wider sources of original information on which the SEC may rely.” (via the Wall Street Journal)

Sound Bite of the Week

Quote from CFO of Palo Alto Networks

“Companies should consider breaking out information security from the CIO organization so that a chief information security officer has a direct reporting relationship to the CFO. When you have a seat at the table for that function, you will get more visibility and transparency into the company’s risks.”
— Steffan Tomlinson, CFO of Palo Alto Networks, on how financial leaders can help build the company ramparts against cyberattacks (via CFO.com)

4 Top Stories + 1 Key Statistic + 1 Industry Quote = The CFO 411
The CFO 411 is our weekly news roundup that brings you top headlines, data points, and sound bites to keep you in the know. Follow our updates on LinkedIn for more finance must-reads.

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