CFO support

All too often, companies make three classic mistakes in their investment decisions.

Using an overly high discount rates to value projects
Double counting risk - e.g. charging both a high internal cost that includes the risk/opportunity cost of lost revenue, and then discounting this risk adjusted rate by some additional risk adjustment factor (e.g. a discount rate, risk factor, etc.)
Ignoring the intrinsic value of staging an investment.

Most companies make all three of these mistakes and more. This has the effect of making the investments put before UK Boards non-credible. Boards react by treating the investment put in front of them as guidelines. Instead of making decisions based more on less on the numbers presented, Boards and CFOs are forced to operate on instinct and experience. They know not to trust the numbers in the business case.

By and large, CFO’s and Boards have the experience to make good decisions despite the approach taken above, but in mistakes in their approach and evaulation criteria mean they are forced to make those good decision in a dysfunctional way. The result large amounts of wasted time and effort. Some estimates suggest that as much as 60% of Board time is spent on inefficient investment processes.

Despite this waste, CFOs are usually too busy managing day-to-day operations to address the internal investment and decision making processes. This is where we come in.

Insight SRI helps CFOs with :

Streamlining internal processes for project and investment decisions
Risk management and internal business case development
Project-by-project support to help develop business cases and financial models
Training to get staff and committees thinking probabilistically