VUCA — stands for Volatility, Uncertainty, Complexity, Ambiguity — is the latest acronym/buzzword to hit the finance and business world.
And aptly so.
Starting with the pandemic in 2020, we’ve altered course as a society, rather than merely bouncing back to what once was.
We’re in the midst of the “new normal” and those who emerge on top, know how to effectively navigate the new, shaky landscape.
Pigment’s latest whitepaper, in partnership with CPM specialist and experienced finance leader Mark Cracknell, highlights the importance of resilience as the secret to successful finance teams and organizations.
The case for building resilience
Resilient organizations had the capacity to resist, absorb, and respond to the sudden changes and challenges of the financial crisis and bounce back faster and stronger in subsequent years. However, they also displayed the capacity to move quickly, flexibly, and decisively – the very definition of agile.
Financial planning and budgeting often face challenges due to varying levels of volatility, uncertainty, complexity, and ambiguity.
For example, constant change makes it difficult to complete the annual budgeting process within the usual timelines. The budget is typically created assuming a stable environment with consistent business plans and macroeconomic conditions.
In reality, finance leaders and teams often need to transition from a rigid budgeting process to an agile forecasting model that focuses on predicting unexpected events.
To address this and other implications of uncertainty, finance teams need to develop a model that incorporates scenario levers and leverages technology to adapt to volatile and uncertain conditions while forecasting in a flexible manner.
Practical steps to increase resilience in finance teams
"The speed at which finance is expected to provide insights has accelerated greatly. What does a pandemic mean for our business? What do higher interest rates mean? I think this has fundamentally changed how finance teams are expected to operate and puts a lot more pressure on all of us." - Charly Kevers, CFO at Carta
The CFO and the finance team are not just number crunchers.
They hold a pivotal position in strengthening the resilience of the entire organization. To accomplish this, it's essential for the finance team to actively engage and collaborate with all parts of the organization, assuming the role of a classic "business partner".
This means working hand in hand with the entire organization, understanding their unique needs, and aligning financial strategies to support their objectives.
By establishing this collaborative relationship, the finance team can build trust and instill confidence across the organization, even in the face of uncertainty.
Our whitepaper dives into the three practical steps that the CFO and finance team can utilize to drive significant impact on organizational resilience.
Download: The Modern CFO: Navigating Uncertainty