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What Keeps CFOs Up at Night?

For the first time, the cost of fuel climbs to the top of the list.
Kate O'Sullivan, CFO.com | US
July 11, 2008

With oil prices hovering at around $140 a barrel, the cost of fuel has officially registered on finance executives' radar screens. In the most recent Duke University/CFO Global Business Outlook Survey, conducted in June, fuel costs reached a virtual tie with consumer demand as the number-one worry among finance chiefs. While CFOs have fretted about consumer behavior for many months, the cost of fuel has steadily gained ground on other concerns: consider that worries over fuel prices came in at number four on the survey for the past two quarters, and ranked seventh at the end of 2007.

Credit markets and interest rates are still causing anxiety for finance chiefs, as is the related issue of the ongoing fallout from the housing-market crash. The cost of nonfuel commodities, together with the cost of energy, is driving concerns about inflation as well.

"We think inflation will increase over the next 24 months," says Jeff Burchill, CFO at FM Global, a commercial property insurer. He says the company has adjusted its forecasts to account for those inflationary expectations. The plans also reflect a dollar that will strengthen, but "not significantly."

At their own companies, CFOs around the world continue to worry about attracting and retaining qualified employees. "Finding quality talent and the cost of that talent are definitely on our minds," says Steven Armond, finance chief at American CareSource Holdings, a publicly traded health-care services company based in Dallas. "It's costing our average worker more to commute and to buy food. We're facing pressures as a result of that." The company has introduced performance-based pay in the hope of drawing and holding on to more staffers.

CFOs are approaching the planning process with apprehension as well. They rank their ability to produce accurate forecasts as their second-highest company-specific concern.

Is there a bright spot in this dreary picture? CFOs appear confident that their services will be necessary to guide their businesses through these tough times: they place personal job security last on the list of concerns.


Awash in Worries
CFOs are more concerned about the cost of energy than ever before.
Top external concerns Average importance score
1 Consumer demand 1.07
2 Cost of fuel 1.04
3 Credit markets/interest rates 0.75
4 Housing-market fallout 0.58
5 Cost of nonfuel commodities 0.50
6 Inflation 0.45
7 Upcoming change in U.S. administration 0.36
8 Other 0.33
9 Devaluation of the dollar 0.32
10 Financial regulation 0.19
Source: Duke University/CFO Global Business Outlook Survey



What's on Your Mind?
CFOs are thinking about the hunt for talent.
Top internal concerns Average importance score
1 Attracting/retaining qualified employees 1.34
2 Ability to forecast results 1.18
3 Cost of health care 0.83
4 Supply chain risk 0.63
5 Managing IT systems 0.61
6 Balance sheet weakness 0.47
7 Other 0.27
8 Protection of intellectual property 0.23
9 Data security 0.19
10 Personal job security 0.14
Source: Duke University/CFO Global Business Outlook Survey



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