With Routine financial transactions becoming automated, CFOs are turning towards artificial intelligence (AI) to add value to the businesses.
FREMONT, CA: CFOs are identifying and targeting areas of new value as one of their prime responsibilities. To help identify new sources of value and the risk, AI can help CFOs establish their roles as strategic enablers. Additionally, AI-enabled capabilities provide the CFOs with the opportunities to reinvent their role from an accountant to a strategic partner.
Here are three ways smart CFOs are leveraging AI to predict business risks and optimize business and investment decisions.
CFOs are called to advise on complicated, high-impact decisions like investments that need to be transparently justified for the financial analysts and investors. These decisions depend on various metrics that do not reflect the complex relationships between various performance drivers.
AI cuts through this complexity by developing data networks that surface correlations between all the potential factors influencing performance, enabling CFOs to accurately model the impact of a decision. However, AI-enabled, the company, to understand how much customer value it would be able to transfer from one store, if closed, to others in its vicinity or the company’s e-commerce channel.
For companies in highly-cyclical industries and those influenced by fluctuating commodity prices, accurate forecasting of economic indicators such as GDP, consumer price index, or housing start indicator can be the difference between success and failure. These leading indicators are published only a month, and in some cases, a quarter, in advance, giving businesses very little time to react and adjust their strategies.
Therefore, more and more CFOs are looking for ways to get these indicators as early as possible to help anticipate economic environment changes and enable proactive decisions about risk exposure, capital investments, asset sales, and activity forecasts. By combining external data with a company’s internal data, AI can generate monthly or even weekly predictions and generate alerts about potential changes in the economy way before those leading indicators are published.
Organizations can also enhance their investments by using AI to find patterns in how their different internal data changes with external trends. These approaches require AI models to be trained on vast amounts of information, which can often uncover unexpected relationships that a CFO would never see without AI.
See Also: Top E-commerce Technology Companies