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Technology as a Solution for Dynamic Financial Planning and Source of Risk

Technology and dynamic financial planning can help flag some risks before they

Practically no industry is untouched by technology. Developments in communication and computing have introduced new business and security risks to the corporate environment.

That said, it's also virtually impossible to fend off the threats without the use of specific programs, hardware updates and a working knowledge of the software necessary for financial executives to do their jobs.

Dynamic financial planning is one CFO responsibility that can be greatly improved by the implementation of technology. As a report from Oliver Wyman points out, a company's financial plan can be considered outdated within three weeks of its presentation. With old processes, responding to this realization and updating the strategy could have taken several more weeks, slowing the company's progress and putting it even further behind its competitors.

But with the adoption of accounting and business analytics software, an organization can react much faster, integrating real-time information into the plan and creating a financial strategy that is much more suited to the current state of the markets.

Technology can also create greater visibility in corporate operations and records, allowing the CFO and other executives to more easily uncover risks and devise methods of reducing the threat. By incorporating objective analysis and hard figures into a risk assessment, the company may be able to avoid the "critical strategic miscalculations" that can occur "if executives do not understand the net impact of the risks embedded in inputs, outputs, overall operations and the markets in which firms operate," Oliver Wyman says in its report.

Building a technological infrastructure that facilitates faster communication and greater collaboration between departments could also enable the sharing of information that may not be apparent to one division or another.

"Treasury, operations, procurement, legal - all of these functions manage key risks to the organization, often in isolation and using completely different measurements," the report says.

If every sector in a company is focusing on a separate aspect of risk and not sharing their findings - such as financial variability, strategic planning and risk management - "financial planning remains disconnected from risk management and executives are frustrated at having expended significant time and effort pursuing ERM without attaining the promised benefits," according to the researchers.

The report acknowledges that it can sometimes be difficult for companies to see the worth in dynamic financial planning, but notes that determining the most pressing risks first can help them "realize value" from the process. Rather than wasting time with less important threats, pick the top 10 to 15 (Oliver Wyman notes that these usually make up 80 percent of total exposure) and foucs on those. Then establish a list of benchmarks that can allow project leaders to check in and verify that the organization is actually making progress on lessening these risks.

CFOs should also be careful not to overlook the risks introduced by new technology itself. While the IT department is typically responsible for preventing malware from infecting company computers and mobile devices, the implications of data breaches can be extremely expensive, so financial executives should take a vested interest in maintaining a high level of information security.

One risk factor that will impact virtually ever department in an enterprise is the introduction of bring-your-own-device (BYOD) policies into the corporate environment. Be sure your IT leaders are developing rules for appropriate use of devices that fulfill personal and work-related needs, and make the necessary investments to protect the technological infrastructure.

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