CFO Studio Magazine with Craig Steeneck, CFO, Pinnacle Foods

s firms throughout the U.S. undertake growth initiatives such as introducing new products, entering new markets, and acquiring other companies, they’re looking to their CFOs for much more than financial leadership. They’re depending on them to oversee a wide range of new areas and play a key role in setting corporate direction and identity. “The CFO has evolved from this accounting function—the most senior accountant in a company—to being this strategic leader who, by the way, is also involved in finance,” says Peter Dontas, Bank of America Merrill Lynch market executive for New Jersey. One task in particular associated with an aggressive growth enterprise is managing risk. In modern high-growth companies, the concept of risk is broader than ever. In addition to worrying about liquidity and other financial issues, the CFO must keep watch on areas such as data security, corporate reputation and, because of just-in-time sourcing and globalization, the supply chain. “Risk used to be how much leverage you could take on,” says Dontas. “Now it probably has 10 or more prongs that fall to the CFO.” Examples include interest rates, commodity prices, disruptive technology, and unanticipated labor costs, including health care. And there’s the ever-present risk of running afoul of changing government regulations. What’s required is for the CFO to monitor and adjust for any problems that could throw the company’s growth strategy off track. A strong balance sheet is important, but it does little good if a data breach sinks public trust in the business. REACHING THE INNER CIRCLE In a fast-growing company, the CFO role demands close alignment with the chief executive. “CFOs are being pulled up to the inner circle,” says Dontas. “They’re traveling internationally with the CEO. They’re more involved with the board. If a task doesn’t involve growth, they’re delegating it to a qualified treasurer because of time constraints.” At the same time, CFOs are picking up new skills—or finding people who have them. For example, insights mined from “big data” are crucial to many high-growth firms’ efforts, providing early notice of opportunities and threats. “It really falls on the CFO and the CFO’s team to be able to collect, analyze and use that data,” Dontas says. The CFO’s job is to aim high but temper that ambition with a list of “what ifs,” scrutinizing whether the company has the financial, human and technological resources to reach its goals. “There are going to be times that the right answer is, ‘No, we can’t do that right now,’” Dontas says. “They have to be strong enough to voice their opinion. If they’re getting dragged along, they’re not doing their job.” FILLING NECESSARY GAPS Since it’s impossible to be an expert in every area, one key to success is turning to outside help when necessary. “For example, to alleviate risk Bank of America Merrill Lynch often provides guidance on the various challenges associated with entering deals with other businesses or expanding into new markets,” Dontas says. The risk of supply chain disruptions is a concern for many CFOs, especially if their companies source from abroad. To ensure greater stability in the supply chain, the bank works with clients to offer credit support to foreign suppliers. Firms can also measure their performance against vast amounts of benchmarking data through a Bank of America Merrill Lynch tool called PeerProfiler ® . A view into other companies’ approaches can be invaluable to executives creating risk-management strategies. That’s especially true in high-growth firms, where CFOs may not have the benefit of long years on the job and extensive mentoring. “The evolution of the CFO role reflects a change of pace in corporate America,” Dontas says. “And that pace isn’t likely to slow any time soon. We used to talk about how things were 10 years ago. Now we talk about last year as being the good old days.” To help your business manage the latest challenges associated with risk, contact peter.a.dontas@baml.com Paid Advertisement The Risks of Change For CFOs, fast growth brings many new challenges Helping you build business success on a strong foundation of community spirit, expert analyses, sound advice and trust. That’s the power of a local connection, with you year by year, wherever you want to grow. baml.com/yourcorner corner stone For marketing disclaimer, visit bankofamerica.com/disclaimer. ©2015 Bank of America Corporation 03-15-0594.C Peter Dontas Market Executive New Jersey Bank of America Merrill Lynch