7 important responsibilities of a Chief Financial Officer (CFO)

In this article, we explainsome of the important responsibilities of a CFO -what does the CFO work on? What are the primary tasks to pursue? These targets will vary by business, depending on its revenue, its industry, sector, its funding requirements, and the strategic intentions of its management team.

Nevertheless, some of the most common CFO responsibilities are:

1. Pursue shareholder value –The usual top priority for the CFO is the relentless pursuit of the strategy that has the best chance of increasing the return to share-holders including a wide range of tactical implementation issues designed to reduce costs.
2. Understand and mitigate risk – This is a major area of concern to the CFO, who is responsible for having a sufficiently in-depth knowledge of company systems to uncover out any risks occurring in a variety of areas, determining their materiality and likelihood of occurrence, while monitoring risk mitigation strategies to keep them from seriously impacting the company. The focus on risk should include some or all of the following areas
3. Construct reliable control systems– A continuing fear of the CFO is that a missing control will result in problems that detrimentally impact the corporation’s financial results. A sufficiently large control problem can quite possibly lead to the termination of the CFO’s, so a continuing effort to examine existing systems for control problems is a primary CFO task. The CFO is deeply involved in the design of controls for new systems, so they go in-line with adequate controls in place. The CFO typically uses the internal audit staff to assist in uncovering control problems.
4. Investment losses – Placing funds in excessively high-risk investment vehicles can result in major investment losses. The CFO also works towards having an investment policy that limits investment options to those vehicles that provide an appropriate mix of liquidity, moderate return, and a low risk of loss
5. Interest rate increases – If a company carries a large amount of debt whose interest rates vary with current market rates, then there is a risk that the company will be adversely impacted by sudden surges in interest rates. This risk can be reduced through a conversion to fixed interest-rate debt, as well as by refinancing to lower-rate debt whenever shifts in interest rates allow this to happen.
6. Foreign exchange risk – Investments or customer payables can decline in value due to a drop in the value of foreign currencies. The CFO should know the size of forexinvestment activity, be aware of the size of potential losses, and adopt hedging tactics if the risk is sufficiently high to warrant incurring hedging costs.
7. Succession failures – Without an orderly progression of trained and experienced personnel in all key positions, a company can be impacted by the loss of key personnel. The CFO should have a succession planning system in place that identifies potential replacement personnel and prepares them for eventual promotion.