By Noorliza Abu Bakar, CFO, IBM Malaysia
As a CFO, do you fully understand risk exposures across your organisation? Can you trust your governance processes to sufficiently ensure accurate risk reporting? Are you able to accurately quantify the riskiness of a transaction?
Risk influences all that we do –from the smallest business decisions to the largest ones. The lack of risk-aware culture especially in financial institutions can be devastating. CFOs can draw upon insights gleaned from Big Data to predict where things may go wrong and devise proactive strategies to get back on course.
The lack of global standards or common law to regulate consistent business practices and business dealings internationally compound the situation and can be seen with the differing enforcement across nations. In ASEAN, such differences exist in the law itself and its application. To add salt to this gaping wound — regulators have lost patience with increased cases of non-compliance.
However, risk can be carefully calculated, controlled and managed with the use of right tools. Many CFOs today can account the impact of outside forces –from the ever changing regulatory and compliance landscape, interest rates, supply chain and other operational events to natural disasters and even consumer sentiment –to inform, shape and govern their corporate strategies.
Moving forward with Big Data and predictive analytics
In recent years, CFOs have started to shift beyond their traditional domain and use performance indicators and risk to predict the future. Hidden patterns of risk rooted within their ledgers and spreadsheets help CFOs provide critical linkages between strategy and execution to stay ahead of the curve.
Forward-looking CFOs are using insights gleaned from Big Data and predictive-analytics technologies to accelerate business performance. By embracing a data-driven approach, CFOs can influence major, strategic corporate decisions involving acquisitions, divestitures, demand planning and forecasting, new markets and more.
Today’s predictive risk models can anticipate and control levers of uncertainty by using “what-if” scenarios to determine specific outcomes. CFOs can draw upon Big Data insights to predict where things may go wrong, and then devise a proactive strategy to get back on course.
For example, if a CFO notices that customer retention is on the decline by analyzing social media chatter, he/she can make a new directive for the business to implement new loyalty programs. By using customer data as a leading performance indicator, the CFO can spearhead smarter growth strategies.
Using Big Data for to manage risk would certainly raise the CFO’s profile to that of a true power player in the C-Suite for strategic decision making.
