CFO and finance leaders

CFOs bullish on AI and soft landing but worry about cyber attacks

Finance departments are embracing artificial intelligence (AI), according to PwC’s October 2024 Pulse Survey. Around a third of finance executives say they’re already using AI in many areas of the finance department. And the pace won’t be slowing anytime soon. Even more expect to use AI across finance 12 months from now.

Even as CFOs continue to focus investments on technology, many are hitting pause on other major spending until there’s more clarity around a new administration’s tax and regulatory priorities. An uncertain economy, including the timing and size of future interest rate cuts, also is hindering investments. And while CFOs currently seem more optimistic than their C-suite peers, they have plenty of concerns keeping them up at night — especially around cyber attacks.

CFOs tap AI for forecasting and other finance activities

Forecasting is a consistent challenge for CFOs. With so much uncertainty, ranging from the presidential election to interest rate changes, accurate predictions have become harder. It’s no surprise that 92% of CFOs say forecasting accurately is a challenge (46% call it a significant challenge). CFOs are starting to use AI to assist. More than a quarter (28%) currently use AI for forecasting, and 39% plan to use it in the next 12 months.  

Beyond forecasting, CFOs are using AI in other areas of finance such as accounts payable and receivable (36% currently using, 24% planning in the next 12 months), process automation (35% using, 37% planning) and predictive analytics (33% using, 30% planning). Companies that delay AI adoption, like the 10% with no plans for AI in forecasting, risk falling behind competitors and sacrificing critical operational efficiency.  

AI is no cure-all, however. CFOs also cite margin management, recruiting and retention, and having enough time for strategic thinking as barriers to achieving their goals. And implementing AI can present its own problems. Eighty-six percent of CFOs say using technology and automation effectively is a challenge.

What you can do

• Build a strong governance and oversight model for AI. Develop a strategy for collecting and governing the use of data from different parts of the business. 

• Look for the most valuable areas for potential AI use. Identify AI opportunities in the finance department and implement pilot programs in the ones with the potential to create the most value. For example, AI can be used to identify emerging market trends and improve financial forecasting, enabling more informed and faster decision-making.

• Look for and develop tech-savvy talent. Today's CFOs have quickly learned that they need to understand tech as much as compliance. This goes for employees in the finance department as well.

Despite investment delays, CFOs bullish on soft landing

The current business environment is causing CFOs to be judicious about spending. Eighty-four percent of CFOs surveyed say they’re delaying at least one investment decision. What’s most pressing? More than a third are delaying investments due to interest rates (36%) as well as balance sheet and cash flow management (35%). Nearly three in 10 (29%) are delaying decisions because of potential tax policy changes.  

Uncertainty around many of these issues should begin to resolve in coming months. The Fed already lowered rates, and the results of the election will provide CFOs with some understanding of what the next four years will bring. More certainty could give CFOs the confidence to move forward with additional investments, especially if there’s a soft landing. CFOs, who often drill down deeper into financial trends than their C-suite colleagues, are more bullish on the overall economic outlook. While 61% of executive respondents overall agree there will be a recession in the next six months, only 46% of CFOs expect a downturn.

What you can do

• Plan for various scenarios. Proactive planning can allow your business to adapt to potential shifts and be ready to act when there’s more certainty in the market.  

• Prioritize areas for investment in order to hit the ground running. Having clear investment priorities helps confirm that resources are allocated effectively, positioning your company to capitalize on growth opportunities.

• Conduct a portfolio review. Evaluate your business portfolio to determine which businesses are core and which are not. Consider divestitures for the non-core businesses. Proactively identify potential M&A targets that are a good fit for your core business if interest rates drop.  

CFOs see cyber attacks as top risk

The likelihood of a soft landing isn’t the only area where CFOs show a significant difference in opinion from other senior executives. Eighty-one percent cite cyber attacks as a moderate or serious risk. Only risk leaders were more concerned (89%). CFOs are often risk averse, and they see plenty to be concerned about when it comes to protecting all the financial and stakeholder data their department collects and stores. This makes them acutely aware of the financial and regulatory consequences of a cyber attack, including potential fines, lawsuits and recovery costs.

CFOs are also worried about geopolitical uncertainty (73% say it’s a moderate or serious risk), margin pressure affecting earnings (73%) and the US regulatory environment (70%). CFOs are likely more concerned about potential regulatory changes in either administration because they are responsible for compliance with financial regulations. They're also now playing a larger role in the company’s sustainability strategy, adding another layer of complexity to what has typically already been one of the most challenging C-suite roles.

What you can do

• Determine the business value of data protection and cloud security to gain stakeholder trust. Use that information to make more informed cybersecurity investment decisions. Work with your CISO on prioritizing the security and confidentiality of financial data protection.

• Verify the accuracy, completeness and defensibility of all regulatory disclosures of cyber risk management and program posture. Develop a clear understanding of materiality and the specific impact of a cyber incident, incorporating cyber risk quantification to accurately assess and communicate potential risks.

• Be aware of the impacts of increased regulatory activity on deals. Build additional time into your M&A timelines to accommodate the potential for lengthier and more detailed reviews. Your integration management office should establish a cross-functional team to respond to regulatory requests. This will require teams on both sides of a deal to confirm the right data is presented to authorities.