In the post-pandemic world, the basics of the business have changed and the lens has shifted from a backward glance at the results to a more futuristic look at how the business will be rebuilt and reconfigured for the next few years.
Covid-19 has changed much in the last six months. It is also helping reinvent the CFO's relationship with the Board as companies brace for the new world order.
In the pre-Covid-19 world, the interaction between the CFO and the Board of Directors was rather structured. A CFO mostly had to share and explain the financial results to the Board of Directors, explain the divergences from expectations or the past results.
In the post-pandemic world, the basics of the business have changed and the lens has shifted from a backward glance at the results to a more futuristic look at how the business will be rebuilt and reconfigured for the next few years.
So if staying afloat has been the priority in the immediate aftermath of the emergence of the pandemic, the lockdowns that have followed have put a premium on the future opportunities and challenges.
One of the most critical aspects that will help provide visibility on the future comes from the circumstances of today. That story can only emerge from credible numbers and facts. And the CFO is best poised to provide these data-driven insights into the past and the future.
Increasingly, companies are facing tough choices on how to ensure survival in the short run and still think and plan for growth in the medium to long run. As the company Boards take capital allocation decisions, the CFOs need to fill them in on not just the details of the value-creation narrative that most appeals to stakeholders like investors, bankers and others.
And sometimes when there is a rift between the truth of the numbers and the narrative of the senior management, the CFO has the unstated task of bringing sanity to the conversation and the plan. This is at the heart of the interaction between the CFO and the chair of the Audit Committee.
Read also: How the chair of an Audit Committee interacts with the CFO.What is a good way to run an Audit Committee?
From the perspective of Board members, especially the ones whose expertise areas lie in areas other than finance, the CFO is a good source of information on long term strategy. The greater the interaction between the Board members on key priorities, the better informed both sides will be on meeting key expectations.
The Board members too can gain from the unique perspective and insights of the CFO. Credible numbers, consistent narrative around value-creation and the reassurance that the details are not being missed can only come from the CFO.WEBINAR: Tune in to find out how term insurance can provide risk protection during tough times. Register Now!
