New challenges have emerged which CFOs need to tackle in order to help their companies successfully through these turbulent times. Some of the key challenges include:
The slowdown in the economy due to the pandemic outbreak is unprecedented. The business environment has been greatly impacted by the global economic recession, continued lockdown in many countries, social distancing and other safety protocols, and consequent changes in consumer behaviour. With the uncertainty likely to continue for another year or so, it has led to increasing unpredictability of business growth scenarios, with a corresponding impact on cash flows.
The digital journey of most companies in the insurance sector was greatly accelerated during this period with many companies enabling digital distribution channels, online issuance of policies, and digital touch-points for customer service, amongst other features. As a CFO, it has been imperative to make informed decisions about investing in technology that helps increase efficiency and improves customer service and experience.
The drop in business volumes over the course of the last six to eight months has had a direct impact on running costs and costs to be incurred for business development. While investing in new technology, software and tools helps insurance companies to analyse data more efficiently and reach out to customers more effectively, CFOs have had to take a tough call on halting or delaying investment into projects that are not likely to generate margin immediately.
In the insurance domain, protecting the privacy and data of our customers is of paramount importance to us. Any breaches of data can lead to devastating consequences for the company and its customers. So while the pandemic has encouraged us towards adopting automation tools and cloud-based solutions, it has become imperative for CFOs to budget for stronger and tighter cybersecurity measures and tools that protect against hacking, phishing and other cyber attacks.
With employees working remotely from their homes, at times it is a challenge to meet statutory timelines and deliverables with accuracy. But as lockdown progresses, improving compliance, both statutory and regulatory, has become the need of the hour. It has become necessary to monitor the EoM and Solvency Margin more frequently than before, driven by both management demand and regulatory reporting requirements.
The sudden imposition of lockdown in March and the shift to remote working led to systems going digital almost overnight. Ensuring automation of internal financial controls over financial transactions became increasingly important as lockdown progressed and business had to go on as usual.
While 2020 has been a year of challenges, it has also been a year of immense learning. By effectively using the knowledge gained from this unprecedented situation, CFOs can help their companies stay ahead of the curve, obtain a competitive advantage and adapt to the rapidly changing business environment.
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