Evolving Role of CFOs and Impact of Regulatory Changes on Risk and Responsibility

In a discussion held on Friday, August 13, 2021, at BW CFO Summit and Awards 2021, top CFO’s of India’s premier companies joined together to yield the best and next practices of the CFO domain. In a discussion on Evolving Role of CFOs and Impact of Regulatory Changes on Risk and Responsibility, top Pharma CFO’s and CFO of Insurance companies joined in to explain their thoughts. The session was joined by Nitin Parekh, CFO, Cadilla Healthcare; Ramesh Swaminathan, Executive Director, CFO, Head of Corporate Affairs, Lupin Limited, Poornima Swaminathan, CFO, Reliance Nippon Life Insurance and moderated by Ruhail Amin, Senior Editor, BW Businessworld.

Nitin Parekh, CFO, Cadila Healthcare explained how the role of CFO has evolved over the years and to become challenging and more and more complex, with the kind of regulatory changes, the complexity of business and competitive pressures, evolving corporate social responsibility and corporate governance roles and larger accountability expected from regulatory agencies including SEVI from the listed public enterprises. “There have been a significant shift in the demanding roles of the CFOs, however, most professional CFO’s as us have taken this as journey for Governance on CFO roles, Northwards. To accept this new order and drive to the occasion, we do over-role, both as a Business Partner and Custodian of business with proper interest”, said he during the discussion.

Poornima Subramanian, CFO, Reliance Nippon Life Insurance further added. “From an insurance perspective, the regulator and the general regulation has been extremely progressive and it surprised us especially in the times pandemic when people have been petrified by the whole thing including facts like are they been eligible for claim settlement for COVID. The CFO’s have been very quick to make amendments to take accountability while they say that it’s included, while COVID was never pre-condition in anybody’s insurance policy.” She further said that with the advent of technology, one can be at home and get his e-KYC done, one can get all their medical tests done and send the documents. There have been immense transformation in the role of CFOs both in the life insurance and general insurance space. There has been multiple ways where they have kind of made it compulsory including the standard life insurance product, which has in a way made the sales figures rocketing, besides bringing more and more people under their coverage net of the insurance sector.

“Secondly, there may not be a second domain which got impacted so dearly by the pandemic situation in the past one year. Meeting and dealing with our customers has been severely challenging during this time, however, that certainly is similar with any other industry too. The fact that claims in the second wave have been really high and so it brings up challenges in terms of solvency requirements, will the companies be able to afloat given the claims were about four to five times higher from any other times. From a CFO’s perspective it brings in several scales to play-one being to be able to forecast similar pandemic like situation and its

outcomes. One needs to be very much adaptive to technology in order to match with the time-frame which is throwing up challenges”, added she

Ramesh Swaminathan, Executive Director, CFO, Head of Corporate Affairs, Lupin Limited explained further, “So far as the regulatory changes are, new rules across national and international borders continued to intensify. No matter how large small and diversified your organization is, every part of it is touched by the evolution of complex regulations. Non-compliance is subject to the risk of penalty and damage of reputation. It’s not surprising that CEO’s across the globe are managing more risks than ever before. There are three emerging trends in recent times which has kind of made things slightly easier; the first being a trend to harmonization and transparency in initiatives. When we speak with regards to pharma perspective, pharma kind of aims harmonization for inspection, globally, developing common standpoint for developing GMP. The second big trend which is impacting the domain is trust towards ease of doing business where we speak about countries states competing with each other for retaining investments through single-window clearances, convenience through faceless assessments and others.”

The third most emerging trend noticed especially in India is a major eruption in adaptation to technology which has not only replaced physical operation and business in a virtual mode but has also kind of impacted our day to day operation, which means increased focus on digital transformation, enhancing approach to meet compliance, obligation and effectively mitigating risk, added Swaminathan.