By Wayne Dewsnap, Exact UK

Since the high-profile corporate failures of recent years drove up corporate risk aversion to unprecedented levels, the eagle eye of the regulator has fallen on all organisations. The UK’s business landscape is now scarred by widespread nervousness over the pressure to achieve — and demonstrate — regulatory compliance to the regulators themselves, and to clients, shareholders and suppliers.

Much of this responsibility has fallen to the finance director. Over the years, the role has evolved from a procedural, inward-looking position to a very strategic role and in larger companies the pendulum has swung back again to a balancing act where finance directors have to switch between an entrepreneurial, strategic role and a monitoring and control function role, as well as acting as a guardian of regulatory principles.

However help is at hand as moves are afoot to alleviate the regulatory burden on businesses. In the UK, the new coalition government has launched its ‘Your Freedom’ website, where organisations can nominate for removal of regulations that are acting as a barrier to their business. Such initiatives are likely to be welcomed by the business community if successful, but will take some time to make a real impact.

In the meantime, finance directors remain under pressure as their remit continues to broaden with each new regulatory requirement. Organisations are beginning to recognise that there will come a tipping point when their finance directors are devoting so much time to demonstrating compliance that their core strategic role will become sidelined.

Left unchecked, this unsustainable approach could lead to paralysis by regulation, where the finance director’s ability to drive the business forward is seriously compromised. Growing pressure on this role could force businesses to reinforce their organisational structure by slotting in additional layers of management. This structure itself is also likely to mutate as the expansion of the finance director function trickles down through the management hierarchy to raise the profile of roles like the financial controller.

The finance director cannot — and should not — be all things to all people. Expecting one person to manage an overarching compliance strategy for an entire organisation, on top of the day-to-day operational requirements and reporting, is unrealistic, and something has to give. Ideally, larger organisations would split this ever-expanding role into two: a strategic finance director and a compliance and control finance director. However, few companies will be in a position to have it both ways.

Ongoing jitters over risk among investors and customers mean that the pressure is unlikely to ease in the near future; nor is the remit of the finance director likely to contract any time soon. There is a consensus among the global business community that tighter regulation is critical to controlling systemic risk and supporting economic recovery.

As businesses attempt to strike a balance between growth and security, tomorrow’s finance director will need to be flexible and adaptable enough to deal with the elasticity of their changing role, with an aptitude for learning skill sets that were never part of the original job description.

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