Finance leaders have been discussing the impact artificial intelligence (AI) will have on the future of work for nearly all of 2023. While the conversations around AI and its impact on corporate finance dominated the narrative at recent finance events, few CFOs are preparing for government oversight of technology’s most talked-about disruptor, despite requests from creators of the technology.
CFOs and their teams have demonstrated a strong focus on expected regulations on things like ESG and salary transparency. But according to Deloitte’s 2023 CFO signals survey, few finance leaders are interested in preparing for regulation around new technologies like AI. Recent data from the survey shows only 25% of CFOs say regulation of and ethics pertaining to the use of AI are of concern or being planned for.
The lack of interest in AI regulation preparation is because CFOs believe there are more pressing issues regarding future regulations, data showed. Nearly two-thirds (63%) of CFOs are focused on ESG regulations. Just under half (49%) also reported preparations related to cybersecurity regulations, which have been a focus for finance leaders' pending new federal disclosure rules.
Data privacy rules (43%), international tax regulations (40%), and industry-specific regulations such as liquidity requirements (40%) are also of concern to finance chiefs.
Finance leaders are concerned that a lack of readiness for new regulations could affect their company's business. The top worry, drawing a response from nearly a third (31%) of CFOs, was new regulations' potential impacts on financial performance, stakeholders, and risk mitigation abilities. Other drivers of interest in regulation readiness included concerns over cost, effort, and ability to comply (25%) and a desire or need to be compliant (20%).
What CEOs Want
While implementing changes and making decisions future compliance CFOs are also being directed by their CEOs to take certain steps toward business changes. The importance of the CEO-CFO relationship, especially in companies that desire to drive and implement widespread change and innovation, can play a significant role in the efficiency and ultimate success of a business transformation.
Over half (54%) of CFOs reported their CEOs are instructing them to focus on reducing costs, with 40% also saying they are being told to focus on strategy and business transformation.
Finance leaders are also being told to perform duties outside of their core responsibilities, too. More than a third of CFOs (39%) said they are being instructed to focus on performance management, over a quarter (27%) are being told to address risk management, and over a fifth are being told to focus on stakeholder relationships (23%).
Further Risk Concerns
While trying to balance pending regulations and the goals of CEOs, finance leaders also reported having risk concerns of their own. According to the Deloitte data, more than eight in 10 (81%) CFOs said they are concerned about economic and financial market risks. Despite other findings that show CFOs have confidence in the overall economy moving forward, the risks associated with an economic downturn are also on the minds of finance leaders.
As for other external risks, the findings show more than half of CFOs are concerned about geopolitical and cybersecurity/social media risks (57% and 56%, respectively), while just under half reported concern about regulatory and competitor-related risks (45% and 44%, respectively).
Internally, CFOs are much more focused on their organizations' decision-making processes, including the people involved and the ability to carry out changes. More than 81% said they were worried about execution risks to strategies or transformations, 80% reported they were worried about talent and labor risks, and nearly three-quarters (71%) cited concerns about internal performance and strategy.