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The Gray Leap: Merging the Human and the Machine

Part 2 of 4: The Future of Risk Management

It’s hard to go even a few days without hearing about the exciting—and disruptive—implications of emerging technologies and advanced use cases for data and analytics. For finance leaders in particular, the promises of new developments in machine learning, predictive analytics, and automation seem endless.

A new whitepaper by Accenture highlights some of the impending promise. “In the Finance 2020 organization, humans and machines will join forces to rapidly multiply finance’s clout with the business.” It seems at once incredibly exciting and a tall order for finance professionals to become cool (or frightening?) cyborgs—modern bot-humans capable of at once reporting on the past and predicting the future, leading their organizations with the robotic strength that is the stuff of science fiction.

Because risk management is becoming less about programmatically addressing the past and more about dynamically interpreting the future, modern finance leaders must embrace the knowledge they don’t have, the data they haven’t analyzed yet, and the possibilities that may impact their businesses.
 

When we read about human ingenuity and decision-making being overruled by data-digesting machines, perhaps it’s not quite Kurt Vonnegut, but it is uncomfortable. For finance teams in particular, blood, sweat and tears are often involved in driving the analytical decisions of a firm, and I imagine it seems at least somewhat disconcerting to some to relinquish decisions to bots and Big Data.

 

Yet, we now have the ability to combine human ingenuity with the benefits of machines—artificial and natural intelligences uniting. And, the nature of business risk is shifting and expanding on an almost daily basis. Human minds alone are no longer a match for risk. But neither are machines alone. The two must work together.

Much current research points to the resource constraints being faced by today’s finance leaders. They’re being asked to do more, with less. The nature and types of risks seen in today’s business climate are unprecedented. It seems that many organizations are jumping on board with modern analytical methods, at least in theory. The Oxford Economics study, “How Finance Leadership Pays Off,” sponsored by SAP, revealed that 73% of surveyed finance leaders believe that automation is improving their function’s efficiency and giving employees more bandwidth for value-added tasks.

The modern CFO seems poised to take on the strategic promises of new technologies, but whether this enthusiasm is trickling down into the organization remains to be seen. A 2017 Forrester Research Study of CFOs commissioned by Dun & Bradstreet found that disparate data, organizational silos, and lack of data integration were named as barriers for roughly a third of finance organizations to creating a data-driven operating model.

Alarmingly, the same study also found that 49% of companies are still using spreadsheets as a primary or “extensive” mode of insight. More advanced analytical methods trailed far behind spreadsheet analysis, such as performance analytics (42% of companies used primarily or extensively), machine learning (28%), predictive analytics (28%), and artificial intelligence (19%). Dun & Bradstreet’s 2017 Enterprise Analytics Study corroborates these findings, reporting that 40 percent of companies surveyed are still using basic technology like dashboards and spreadsheets for analysis and reporting.

Making the transformation to a data-and insights-driven organization isn’t easy. And don’t get me wrong. I love a good spreadsheet as much as the next leader. But, we can’t escape from the fact that most firms have an overabundance of data but do a poor job of leveraging it for insights. So, although there is clearly a will to adopt these modern best practices, there still seems to be a gap in realizing their promises.

Gray Matters: 3 Emerging Finance Leaders in a New Era of Risk

My hope is that modern developments in analytics and technology for finance will help finance leaders to bring more of their humanity to work, not less. But this requires an evolution in thinking, and arguably in skills as well. To truly implement modern technologies successfully, here are three emerging roles for finance leaders that I believe are foundational to achieving human-machine transformation:

1. The Intrapreneur
This may seem like a skill that finance professionals have built-in. Highly analytical and detail-oriented, finance professionals bring a natural data facility to their roles. Yet, because of the rapidly changing and expanding sources, types, and nuances of managing data, becoming familiar with and communicating insights from the data that an organization has at its disposal is becoming much harder, and more essential.

A modern finance leader’s ability to not only understand and interpret this data, but to bring opportunity areas forward to the greater organization to use the data in value-oriented ways, is a skill sure to only increase in value over time.

2. The Change Agent
Finance leaders pride themselves on their logical and numerically-driven decisions, but this quality can quickly become a handicap in the midst of evolving risk. “While finance must always maintain rigor and discipline around costs, cash and compliance, in the digital world, finance and business experimentation are not an odd couple.” Finance professionals often know more about the inner workings of an organization than any other team. Bringing innovative solutions to the table with the knowledge that finance leaders possess is often invaluable in setting strategic direction.

From influencing investment opportunities in technology, to improving customer experiences, to setting the path forward for how data is used within a company, finance leaders have multiple opportunities to lead the charge in creating positive and needed change.

3. The Sage
From economic volatility to reputational risk, the future of risk management is highly dependent on rapidly analyzing and making sense of the data at our disposal to make the best decisions. Increasingly, this must occur real-time and not analyzed and discussed on a yearly basis. Because risk management is becoming less about programmatically addressing the past and more about dynamically interpreting the future, modern finance leaders must embrace the knowledge they don’t have, the data they haven’t analyzed yet, and the possibilities that may impact their businesses. They must then bring the rest of the organization on a journey to understand what may happen in the future.

Embracing Gray
The days of black and white are over for businesses. Modern finance leaders who embrace the color gray, I would argue, are the keys to helping their organizations implement truly modern decision-making models to manage risk and drive profitable growth. By embracing the color gray in a historically black and white profession, they bring the best of themselves and the best of modern technologies to manage risk and drive growth for their businesses.

This article was originally published on CFO.com.

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