The 2023 CFO Survey conducted by American Express in the UK, France and Germany reveals that 78.2% of CFOs consider energy disruption planning highly important this year. Finance leaders are actively involved in building contingency plans and investing in supply chain technology to boost organisational resiliency amid ongoing energy disruption.
Potential price increases for energy supplies are threatening working capital and profit margins, with large businesses facing £8,500 in costs per minute of downtime from power cuts [1].
CFOs are re-evaluating their energy-sourcing strategy to protect their organisations' financial health - reducing energy consumption, meeting sustainability goals, and mitigating the impact of energy shortages. They collaborate with IT and operations teams to create effective business continuity strategies and assess risks within their supply chains, utilising digital technology to gain valuable supply chain insights.
The world faces heightened energy insecurity due to price increases, global instability, and extreme weather events. Economic recovery post-pandemic has strained the global energy system, leading to sharp price rises in natural gas, coal, and electricity. Geopolitical issues and environmental factors also raise concerns about energy supply security and renewable energy availability.
CFOs' roles have expanded to include forecasting, scenario planning, stress testing, and business continuity to address the uncertain energy market and bolster organisational resilience.
To prepare for energy disruption, CFOs must incorporate energy supply into scenario modelling and contingency planning, analysing potential impacts, agreeing on recovery options, planning implementation, and testing the plan. Contingency planning considers indirect impacts, such as reduced capital, transportation delays, and communication disruptions.
By proactively addressing contingency planning and stress testing, CFOs can mitigate the risks posed by changes in the global energy market and enhance energy resilience, leading to substantial energy consumption reductions and meeting ESG targets.
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[1] DCResponse, What is the cost to your business when you lose power?