CFO Pete Tantillo: Finance Chiefs Should Be In Charge Of Managing Risk

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The CFO's "native language of digits and ledgers and models is, in fact, the language of risk," says Tantillo, who argues that finance leaders should also be teaching that language to others.

Peter Tantillo is CFO of RapidRatings, a New York City-based financial risk and data analytics firm that helps companies manage risks within their supply chain. In the following interview, Tantillo discusses why CFOs should be at the forefront of managing such risks, a concept he contends has been typically overlooked by many finance offices. He also shares his view on how the role of the CFO has evolved, particularly in light of Covid-19 – enough for Tantillo to also take on the title of “chief risk officer” at RapidRatings.

How should CFOs manage risks within their company’s supply chain?

As the strength and resiliency of your supplier base becomes more critical in the Covid era — where we have shortages of product and kinks in the supply chain — it’s more important than ever that you understand the financial health of your public and private suppliers, alike.

We’ve developed a way for companies to engage in meaningful dialogue, with questions like: How do you know that those goods or services will be there for you in these challenging times? Can they meet your demand forecast with quality, every time? What internal and external challenges have your suppliers — and their suppliers — been facing since the beginning of the pandemic?

You need to have transparent conversations with your business partners so that you can foresee mutual risks, mitigate disruptions and build more meaningful partnerships. You also need to go wider and deeper than a general credit evaluation. Even though such evaluations share DNA with financial health analyses, the latter incorporate other critical metrics: resiliency, growth potential, upside capacity and long-term value of a relationship. When you have that objective data, it makes conversations with your third parties stronger because you can influence their thinking or actions collaboratively and, ultimately, build a stronger supply chain. We believe that the most fundamental way to do that is by understanding their financials first, especially when it comes to private company suppliers.

How are you involved in RapidRatings’ strategy going forward?

I’m lucky to be at a company where I’m not only valued for the traditional CFO expertise I bring to the table, but also my ability to influence the forward trajectory of the business. At RapidRatings, we have a very collaborative and hands-on culture, and I often find myself deeply immersed in strategic discussions with sales, operations and product, as well as my CEO.

We are in the business of helping our clients assess risk among their third-party suppliers and other business partners through financial insight. As such, we are often focused on how we solve the strategic challenges facing CFOs at organizations, regardless of how big they are or where they are located.

Can you describe why you are passionate about how the role of the CFO has evolved, particularly in light of Covid-19?

I think this year has inherently expanded most people’s field of vision when it comes to risk. Regardless of your trade or role, pervasive uncertainty has meant a somewhat constant anxiety — forcing each of us to imagine new scenarios beyond our more everyday responsibilities. Yet, one thing about uncertainty is it can usually be expressed through numbers. Even risk itself can be quantified. And that’s a natural starting place for any finance chief.

Our native language of digits and ledgers and models is, in fact, the language of risk. And in today’s environment where everyone’s risk point of view has changed, it’s not only incumbent upon us to speak that language, but also to teach it.

Realize that risk language can be read backwards, too. Just as the numbers can indicate liabilities, exposures and perils, they can also indicate opportunities, growth and health. Ultimately, the numbers require interpretation. They don’t, themselves, narrate — they reflect. It’s incumbent on us to interpret both the risks and opportunities, so that businesses can understand what’s ahead.

Any other aspects of your role or experience in the field you would like to share?

Like most CFOs, I take pride in being a trusted business partner to my CEO, and I find that has served me well over many years. Part of that is flexing into a role that truly supports and fosters an understanding of not only our risk exposures and profile but also enterprise health across the board — through the lens of financials.

These concepts, wherever they’re expressed in the business’ risk and health, aren’t enemies — they’re fraternal twins. Neither is isolated to a single department. If there is deterioration in one area of the business, however acutely, other departments will have to compensate with time, talent or other resources.

Conversely, when performance is collectively good, there’s more capital available for R&D, ESG, cyber, compliance and other investments. Financial health is foundational and it’s dependent on collaboration. The core of successful collaboration is speaking the same risk language.

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