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2022 FINANCE & ACCOUNTING PREDICTIONS

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by David Brightman, Director of Product Marketing at BlackLine

 

Finance & Accounting organizations will migrate to a hybrid work model in which CFOs provide the tools to finance staff to productively work from anywhere.

During a period of pronounced uncertainty in 2021, finance staff at many organizations pulled off the impossible, effectively closing the books on time and even taking a stab at earnings forecasts—from their homes. Having proven their mettle, finance staff (and other knowledge workers) in the future will continue to seek employment opportunities that adhere to the “work from anywhere” model.

Nearly two-thirds of U.S.-based employees in a 2021 survey by McKinsey & Co. said that COVID-19 had caused them to reexamine their “individual purpose”—what they’re doing in life and work and what they want to be doing in the future. The top three reasons employees are quitting are because they don’t feel valued by their organization, they don’t feel valued by their manager, and they don’t feel a sense of belonging at work, McKinsey discovered. Finance & Accounting organizations that fail to provide this value will fall victim to The Great Resignation as it persists through 2022.

In 2022, as the “work from anywhere” model takes firmer hold, Finance & Accounting organizations will invest in tools and technologies that help their employees execute work tasks and better manage their time, whether it be automation for repetitive, time-consuming tasks, or collaboration tools that help teams find more productive and enjoyable ways to connect.

At the same time, finance staff will have a greater voice in their company’s positions on issues like diversity, equity, inclusion and belonging (DEIB) and environmental, social and governance (ESG). In these regards, CFOs will seek people with traditional financial skills, in addition to interpersonal skills like leadership, empathy, and adaptability, and cognitive skills like critical thinking, project management and decision-making.

 

David Brightman

Demand for multiskilled F&A Teams will Intensify as corporate functions seek more insightful business intelligence for decision-making.

CFOs will look to recruit talent with a combination of both traditional finance & accounting (F&A) proficiencies and broad-based software and technology skills. One without the other is ineffective to reach or surpass their desired standard of performance.

The next stages of digital transformation will drive this growing demand for multiskilled talent. Finance teams will be tasked with advising colleagues across functions on the strategic meaning of real-time financial metrics like revenues, capital availability, liquidity and net profit, as well as more subjective metrics like pipeline aging, on time deliveries, days sales outstanding, customer satisfaction and employee engagement.

Since each function produces its own data, finance organizations will be tasked with using machine learning and other cognitive computing tools to assess this data in relationship to real-time financial information. To convert wide-ranging performance data into insights for each function’s decision-making needs, the finance organization increasingly will encompass individuals with broad business knowledge and technology skills.

 

The role of the CFO will expand to include ESG oversight

The demand among institutional investors like State Street, Vanguard and BlackRock for publicly available information on a company’s ESG risks will increase in 2022, leading to the likelihood of public company ESG reporting requirements. In anticipation of ESG data being audited and assured, each of the big four audit firms and major management consulting firms have already developed offerings providing professional-grade audits and/or assurance of climate change disclosures.

As the business and strategic partner to the CEO, CFOs will step up to become the executive sponsor of their organization’s ESG initiative, developing the governance structure and control environment for the company’s environmental, social and governance factors and risks, while providing ESG oversight, monitoring and accountability.

CFOs are the logical candidate to lead the ESG initiative. Their responsibilities already entail ensuring that the financial report is accurate, complete and verifiable, according to GAAP accounting standards and disclosures. Given their knowledge of GAAP and how to prepare a financial statement, CFOs will ensure that ESG data receives the same attention and care as other financial data reported in the financial statement.

Business

The Evolution and Challenges of Crypto Regulation

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CRACKING THE CRYPTO CODE

Cryptocurrency regulations are evolving quickly around the globe with authorities responding to developing risks professed by criminals exploiting the latest payment methods to mask and launder the profits from their crimes.

According to William Je Founder & CEO, Hamilton Investment Management Ltd, this has warranted the introduction of a more stringent level of due diligence by additional bodies to introduce preventative measures.

William Je Founder & CEO, Hamilton Investment Management Ltd explains: “The past ten years has seen several structural changes in Know Your Customer (KYC) and anti-money laundering (AML) regulations in both Europe and across the world. High-profile money laundering cases and the penetration of illegal monies into global markets have caught the attention of regulators.

“As regulators improve their understanding of these criminal practices, AML requirements have also been improved. However, these improvements have been a reactive process.”

To address the challenges of the blockchain ecosystem, the European Union has started to introduce financial regulations that further bolster the regulatory system in order to improve licensing models. Many member states are regulating crypto assets individually, and Germany is leading the way in being the first to regulate.

Je continues: “These national driven regulations clearly point to a future pathway for crypto companies, outlining the requirements for obtaining and maintaining a financial license from the regulator.

“Compliance, however, is to my mind essential as it not only boosts investor confidence but adds a necessary layer of protection to investors.”

As crypto evolves, so have regulatory bodies’ efforts to monitor, address and enforce restrictions. The most prominent is the Financial Action Task Force (FATF), which details guidance and determines best practices in anti-money-laundering practices and combating the financing of terrorism.

FATF Recommendations number 16, better known as the ‘travel rule’, which requires businesses to collect and store the personal data of the originators and the beneficiaries in blockchain transactions, is the most notable.

Je concludes: “What does this mean? In theory, access to this data will enable authorities to have better oversight and enforcement of crypto market regulations. In other words, they’ll know exactly who is doing exactly what.

As we have always argued – transparency is key. We need to regulate crypto as an asset class with efficacy, which necessitates legislation that is applicable specifically to digital assets and does not hinder the market.

The criminal financial trade which arguably encompasses money laundering, illegal weapons sales, human trafficking, is also international. Thus, cracking down on it is, out of necessity, an international effort.

The decentralised nature of blockchain, which runs contrary to the central-server standard we know and use nearly everywhere, presents a formidable challenge here. Rules and regulations for traditional financial institutions are being implemented wholescale into the crypto sector. We believe that this is arguably wrong footed as it ignores the innovation and uniqueness this asset class and its underlying technology entails.

Traditional forms of regulation from the fiat world do not reciprocally apply to every aspect of crypto nor to the fundamental nature of blockchain technology. However well-intentioned they may be, because these imposed regulations are built on an old system, they must be adapted and modified.”

 

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Business

How bug bounty programs can help financial institutions be more secure

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Rodolphe Harand, Managing Director at YesWeHack

 

Financial services have been one of the most heavily targeted industries by cybercriminals for several years. One alarming stat from the Boston Consulting Group found these firms to be 300x as likely as other companies to be targeted by cyberattacks.

Furthermore, the pandemic has led to a significant increase in the number of cyberattacks targeting financial institutions (FIs), with around 74% experiencing a spike in threats linked to COVID-19.

With FIs holding some of the largest collections of sensitive and private data, it’s clear they will remain an attractive target for malicious actors, especially as any data stolen can be used for fraudulent activities. This leads to the reputational damage of the financial entity that was compromised and has a knock-on effect in terms of monetary and reputational damage to affected customers.

For CISOs at FIs, the conundrum faced is how do you protect intellectual and customer data, and ensure accountability and transparency for clients and stakeholders, at a time when the pandemic has created budget constraints. Research from BAE Systems found that last year alone, IT security, cybercrime as well as fraud and risk departments had their budgets cut by a third.

Below we look at how bug bounty programs can help to address these pressing issues.

 

Protecting valuable data

Protecting customer and intellectual data has always been a top priority for FIs. However, as opportunistic cybercriminals have a lot to gain by stealing this valuable data, there is a constant evolution of threats, which means FIs must stay on their toes. By deploying a bug bounty program, FIs can work with ethical hackers that have a wealth of experience and unique skills when it comes to identifying security weaknesses within a FI’s defence, thus helping to implement effective security measures to help prevent data breaches.

Building trust among various stakeholders such as customers, suppliers and investors is critical for achieving business goals. By deploying a bug bounty program, FIs send out a message that they care about protecting the security of the data of those they work with – which in turn can have a cascading effect resulting in better business performance.

 

Improving accountability  

For FIs to win customers and keep them happy, amidst the growing threat of neo banks and customer-centric fintech organisations, speed of innovation is crucial. As such, many FIs have adopted an agile approach to build, test, and release software faster to bring online and mobile banking solutions to market quicker. However, this can create frictions between development and security teams. Security mandates are deemed to be unnecessarily intrusive and a cause of delayed application development and deployment.

Yet, with DevOps teams needing to build and deploy applications faster than ever before, an epidemic of insecure applications has emerged. According to Osterman Research, 81% of developers admit to knowingly releasing vulnerable applications, while research from WhiteSource found 73% of developers are forced to cut corners and sacrifice security over speed.

With developers often not having the time, tools, skills, or motivation to write impeccably secure code, there is an evident need to provide developers with more support when it comes to building applications securely Fortunately, bug bounty programs can provide a “fact-based” financial implication of inherent security flaws within the process. This makes it possible to hold development teams and service providers accountable for creating or delivering insecure products, thus addressing inherent security gaps within the business units and helping to drive continuous improvement.

Moreover, security awareness and education of developments teams can be improved significantly for those developers that are directly involved with the management of vulnerability reports for their bug bounty programs. This is because, the mere fact of exchanging information with ethical hackers, or assimilating the thinking of a potential hacker and having proof of concepts of vulnerability exploitation on their application components, naturally accelerates consideration of security early in the development stage and provides ongoing learning.

 

Get more return on your investment

According to Gartner, 30% of CISOs effectiveness will be directly measured on their ability to create value for the business. When security budgets are challenged, CISOs need to demonstrate business value through initiatives designed to enhance efficiency whilst stretching the dollar.

This is where bug bounties can help tremendously. Compared to conventional penetration testing, bug bounty offers a fast, complete, and measurable return on your security investment, with businesses only paying out for successful discovery of vulnerabilities. Equally, businesses get access to hundreds of ethical hackers that can test their programs, each with their own unique skillsets as opposed to only one skilled researcher testing the network. This results-driven model ensures you pay for the vulnerabilities that pose a threat to your organisation and not for the time or effort it took to find them.

Bug bounty programs also deliver rapid vulnerability discovery across multiple attack surfaces. With this approach, organisations receive prioritised vulnerabilities and real-time remediation advice throughout the process to accelerate the discovery of, and solution to vulnerabilities.

Another appeal of bug bounties is that due to the continuous nature of testing, more vulnerabilities are found over time as opposed to pen-testing. This is key to financial institutions that require agility to keep up with the continuous roll-out and updates of applications.

 

The cornerstone to a successful security programme

The risk posed to financial institutions by cyber threats will only continue, as evidenced by the number of data breaches seen in recent times. The COVID-19 pandemic has only exacerbated these risks, especially with almost all FIs having needed to shift to a remote working environment – which has only widened the attack landscape.

For FIs, a bug bounty program should be considered a fundamental cornerstone of any security strategy, with it being a modern-day cybersecurity solution that is well-equipped to tackle the immediate security challenges they face. In doing so, FIs will not only prove to customers and stakeholders their commitment to data protection and security but this will also be help them to avoid the monetary damages that could be imposed by regulators if a breach was to take place.

 

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