With the rise of sophisticated cybercrime, keeping sensitive data secure is becoming increasingly important for Chief Financial Officers (CFOs) of small and middle-market businesses. Rising interest rates, tight labor markets, and wage inflation are also top concerns for CFOs.
In addition to developing and overseeing the execution of operational strategies and financial reporting activities, CFOs are spending more of their time keeping cybercriminals at bay.
Concern about data security is at an all-time high among finance chiefs, according to the latest quarterly Duke University/CFO Global Business Outlook survey.
CFOs at nearly one in five companies that participated in the outlook survey admitted that cybercriminals have breached their computer systems. And “there are probably many more who don’t know that their company’s systems have been breached,” says Cam Harvey, a founding director of the survey who teaches a technology innovation course at Duke’s Fuqua School of Business:
“Companies are defending themselves from near-continuous denial-of-service attacks and critical data breaches,” Harvey says.
Most companies are taking steps to reduce data security risks. Of surveyed companies, 71 percent have installed anti-penetration features like two-factor authentication or more stringent password protection. Also, 54 percent of the companies have upgraded employee training, while almost half have hired outside data security experts.
In other survey findings, companies expected their cost of borrowing to increase over the next year. The typical firm expected its long-term borrowing rate to increase to 5.8 percent from the current 5.2 percent. Higher interest rates would lead a typical firm to reduce capital spending growth from about 8.3 percent this year to about 7.1 percent next year.
“Rising interest rates dampen companies’ incentive to borrow and spend, slowing economic growth,” noted John Graham, a finance professor at Fuqua and director of the survey.
This however, has not affected the level of business optimism among CFOs, this area remained at an all-time-high of 71 on a 100-point scale.
The survey’s CFO Optimism Index has proven to be an accurate predictor of future hiring and overall gross domestic product (GDP) growth.
Remaining close to a two-decade high was the proportion of companies indicating they were having difficulty hiring and retaining qualified workers. More than 41 percent of surveyed CFOs listed the matter as a top concern.
Companies plan to boost employment by a median 3 percent in 2018 and increase wages an average of 4 percent, according to the survey. Wage inflation, now a top-five concern for CFOs, is expected to be strongest in the technology, transportation, and service/consulting industries.
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