Commentators and researchers have focused on the crucial role of the CEO in leading effective corporate action to promotehigh performance, high integrity, and sound risk management. What receives far less attention is that, more and more in our increasingly complex, volatile, and fully-globalized business world, the effectiveness of such action depends on a powerful partnership between the Chief Financial Officer (CFO) and the General Counsel (GC). This critical alliance needs and deserves much greater analysis and application.
The CFO-GC alliance has always been important because the finance function and the legal function are truly the nervous system of the corporation—sending critical signals to all parts of the company about the accuracy of the financials and compliance with law. But, the integration of finance and legal is even more consequential today because what the corporation can and cannot do across the globe is affected directly not just by financial and commercial issues which the CFO analyzes but, increasingly, by evolving “business and society” issues which the General Counsel and the corporate law department must address. These issues include legislation, regulation, litigation, enforcement, investigations, geopolitical risk, demands for ethical actions, and public criticism, affecting all the functions of the corporation in their interaction with all levels of global governments (central, regional, local). Especially in light of ever-increasing variety and intensity ofstakeholder demands on the corporation, these business and society issues, under the purview of the GC, must be closely fused with the CFO’s financial and commercial analysis to serve the CEO and top business leaders when they make and implement core strategic and operational decisions.