CFO 'must-have' skills: risk / compliance / strategy; Whether you're a CFO now or aspire to be one, you need to make certain you've got your skills "down pat" in three key areas. Then you can navigate market changes and embrace governance to improve stockholder value.

• Author: McCarthy, Mary Pat
• Position: Strategy

Globalization has prompted many corporations to significantly expand beyond their borders, opening themselves up to a myriad of unknown risks. To succeed in this environment, companies must learn to leverage compliance, risk management and strategy against longstanding financial metrics such as cash flow, return on investment, economic profit and shareholder return.

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Thus, in this new business climate, leaders of multinational corporations are consumed with managing far-flung operations that can be affected by a number of economic, political and environmental factors. So, how do today's leaders manage these new risks, and their inherent challenges, while generating value for shareholders?

The first part of this answer lies with CFOs and their ability to lead the organization's risk-management efforts with an eye toward programs that involve the entire enterprise. In doing so, CFOs can help companies gain an unexpected benefit from their efforts to comply with new regulatory requirements, such as Sarbanes-Oxley in the U.S.

Indeed, for most companies, the work to achieve compliance has provided CFOs and other company executives with a wealth of information about the inner workings of their organization's internal controls and financial operations.

The second part is found in the CFO's skill in coupling risk management with more effective strategic planning. Of the many methods employed by organizations, scenario planning has proven to be one of the more successful means of providing executives with a realistic idea of what may lie ahead. These efforts demand the unrelenting commitment from management and the board of directors, efforts that the CFO can help to guide. They must identify their company's tolerance for risk and drive compliance to be an everyday event within their organizations, since strong stewardship can directly affect the company's ability to generate long-term financial value.

The following discusses how CFOs can help their companies navigate market changes and embrace governance to improve stockholder value by mastering three areas: emerging risk, regulatory compliance and strategic planning.

Emerging Risk

As companies seek to reap the benefits of free trade and expand to new markets, they are encountering new kinds of strategic and financial risks. In addition to the traditional economic uncertainties encountered in the course of doing business, many organizations face implications related to political upheavals, currency volatility and other variables.

Geopolitical instability, for instance, has increased oil price shocks and elevated the cost of doing business for fuel-dependent industries, such as airlines and plastics. Rising interest rates in the developed...