Among the many daily dilemmas facing the average CFO is the crucial task of risk management. Finance leaders must always weave together efficient solutions to complex problems in short order and on tight budgets, and that's just to keep up with the pack. When a business wants to truly make its mark and surge ahead of the competition, CFOs and other executives must juggle these daily responsibilities along with all the new risks involved in developing new systems, building talented staff and bringing it all together.
That's why technology disruption is among the biggest challenges facing modern CFOs. As industry after industry falls prey to scrappy upstarts who drive efficiency through innovation, established firms need to shift into overdrive just to compete. That requires a fresh look at several aspects of a business and redefining the old ways of doing things.
Disruption case study
By now, tales of tech disruption in consumer products and services are familiar to most executives. One industry that's been going through a more quiet revolution, according to CFO.com's Gary Love, is the insurance market. Insurers are in the business of risk, but somewhat ironically, few of the major players predicted the impending danger that would put their own earnings in jeopardy. With new predictive data analytics tools, small upstarts in the insurance industry are making big waves and giving their CFOs the tools to make decisions based on actionable intelligence.
"The insurance industry is one of many warming to analytics."
As Love discussed at length, predictive analytics presents many opportunities for the insurance field.
For example, car safety data can be automatically digested and analyzed by a system, providing more accurate risk assessments for less money. Those savings can then be passed onto drivers. Or in the property and casualty market, these same data science tools might be put to use developing more accurate weather models, especially if they can integrate with 3-D modeling to simulate how a building might react to a storm.
Of course, actuaries, underwriters and accountants have always been able to do this same work, in theory. But data analytics makes these complicated tasks considerably faster and less expensive. In many cases, they are even more effective.
"There have always been smart people to estimate your risk," Love wrote. "What's happening now is that decades of actual loss experience and hundreds of thousands of site visits are being applied to current conditions at property owners' sites to make risk identification more robust than ever."
More game-changers for CFOs
The list of new tech developments that could disrupt almost any given industry keeps getting longer. TechTarget elaborated on some of the most promising new areas of research that are giving innovative CFOs a leg up.
Two of these hot disruption topics involve outsourcing, specifically the new tools available to allow companies to tap into talent from anywhere in the world without sacrificing insight and value. The crux of this paradigm shift is the cloud computing model, which gives companies access not only to vast amounts of storage and processing power, but also the resources to collaborate with teams of people from anywhere. The nature of cloud explains another major disruptor in finance: Asia. In many parts of the world's largest continent, businesses and governments are investing heavily in data infrastructure as well as talent. Tapping into these resources will be a boon not only for the nations themselves, but also their clients abroad.
Talk to Consero to learn more about the newest ways businesses are gathering financial insights to push themselves into new ideas and beyond old habits.