Building financial resilience

What is financial resilience?

Financial resilience is the ability of an individual or business to carry on or roll with the punches irrespective of the impact on operational workings or assets. Many businesses report that the biggest risks related to resiliency are business growth and scalability.

Protiviti’s Executive Perspectives on Top Risks for 2023 and 2032 survey found that the risks faced by CFOs include:

• Organisations' succession challenges and the ability to attract and retain top talent may limit the ability to achieve operational targets.
• Economic conditions in markets currently served may significantly restrict growth opportunities.
• Anticipated increases in labour costs may affect the ability to meet profitability targets.
• Resistance to change that may restrict the organisation from making necessary adjustments to core operations and the business model.
• Uncertainty surrounding core supply chain ecosystems.
• Changes in the overall work environment that may lead to challenges in sustaining culture and the conduct of the business.
• Organisations' culture may not sufficiently encourage the timely identification and escalation of risk issues.
• Organisations may not be sufficiently resilient and/or agile to manage an unexpected crisis.

How to build financial resilience

For many companies, one of the biggest factors in not being able to drive change and build resilience is a lack of resources, both in terms of people and technology. To combat this, it’s important that businesses implement the right building blocks and promote a vision to build financial resilience.

This starts with setting the right foundation by creating the time and headspace for change and transformation. Companies should then create a prioritised list, as this allows them to focus on the right achievable targets going forward. Finally, they should work either in-house or externally to select the optimal delivery approach.

Taking all the above into account, building financial resilience also requires focusing on small, incremental changes to quickly drive value, as well as being open to newer ideologies that can help fuel innovation. There’s now an increased need to be more agile in the design and thought process. Many businesses have praised newer methods like journey mapping and hackathons that have helped to fuel innovation and push them in achieving the required results.

Responding to change with speed requires a slightly higher allowance for error but can be benefitted by an informed roadmap of options to guide decision making alongside a heightened focus on assessment and feedback. Prioritise a regular feedback loop of both quantified results and qualitative input from operating teams and stakeholders in order to fine tune responses and make appropriate adjustments to maximise the impact of changes.

Embracing technology and data is another avenue. Finance robotics process automation (RPA) can drive greater efficiency, compliance and productivity. RPA technology usually costs one third the amount of an offshore employee and one fifth the cost of an onshore employee. According to Protiviti’s Global Technology Executive Survey, over 60% of companies currently use or plan to implement RPA technology in the next three years.

Why is resilience important to financial institutions?

Businesses that not only survive but thrive in this unpredictable economic environment are aware of why it’s important to build financial resilience. And none categorise this more than the importance of people.

According to Protiviti’s 2023 Global Finance Trends Survey, the biggest HR/people-related concerns for finance organisations were:

− Rising cost of wages (37%)

− Ability to retain people (36%)

− Ability to recruit qualified candidates (33%)

− Building and maintaining culture amid hybrid or remote working model (33%)

− Resources for recruiting, internal and external (33%)

Among the strategies CFOs and finance leaders are employing to obtain needed talent and skills are the increasing use of technologies and automation, upskilling and reskilling staff, implementing flexible work arrangements, and increasing use of managed services providers.

Financial resilience is essential to building a viable business model sturdy enough to navigate this period of great uncertainty. Leaders need to adopt an agile approach to change management by responding to unfolding challenges at speed, prioritising relationship management and future-proofing their decisions. Resilience and perseverance – especially after setbacks – are among the most important qualities of a good business. This is the only way they can cope with and overcome the unavoidable challenges and setbacks that are seen in day-to-day business.

On Thursday 12 Oct at 1 pm, Clive Davis, Executive Director - Enterprise Optimisation, Europe will lead the next session, titled People – Your Most Valuable Asset. In this session, we’ll discuss mastering the talent battle – finding, engaging and retaining the right skills for success. Register today for the rest of the series.