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CFO Series: Decision-Making in An Irrational World - NEW! - Webcast

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8.0 Credits

Member Price $310.00

Non-Member Price $410.00

Overview

What can we do when the world changes constantly This four-topic presentation spotlights various methods to enhance decision-making in a dynamic, ever-changing environment, focusing on proven and new risk reduction techniques. We also take an in-depth look at the practices that work and the ones that do not. The focus is straightforward: understanding risk and getting the most return from risk reduction with verified approaches to increase profitability, since our mission is to increase the value of the organization.

This day of the CFO Series will focus on these four topics:

  • Acute Uncertainty Will Never Go Away: Can We Prevent Our Plans from Failing?
  • Decision Making in a Non-linear World: What They Did Not Teach in Management Accounting
  • Advanced Financial Analysis: Choosing the Right Tools in a World Full of Randomness
  • Diversification: A Risky or Risk-Averse Strategy?

OSCPA has partnered with the Idaho Society of CPAs for this event.

Highlights

Session 1: Acute Uncertainty Will Never Go Away: Can We Prevent Our Plans from Failing?

Perfection is fantasy and we must accept uncertainty. Most of our plans are useless and outdated within weeks after we think they are 'finished'. Instead, we must change our way of thinking in a world where change is normal - and use better ways to plan. Some risks can be quantified, but most cannot. Some hazards are measurable, most are not. We will discuss multiple tactics to minimize, as best as practical, threats and gambles so we can feel better about our decisions. We can do better at planning and dealing with uncertainties, but it is impossible to be perfect. Join us to learn how we can better deal with an ever-changing environment. There are methods to deal with ambiguity and doubt, we will review approaches to help you plan.
  • How and why ambiguity is good, and how certainty can be harmful
  • How the past blinds us to the real future
  • What is the difference between risk and uncertainty
  • Managing measurable risk and unmeasurable risk
  • We need to ask, "What could happen, not what will happen"
  • Why have our current planning approaches failed? What can we do to improve
  • The need to analyze decisions from multiple perspectives, why we must 'think twice'
  • Probabilities are not necessarily predictive. How statistics can be misused and misunderstood - thus increasing risk
  • Not everything can be anticipated, e.g., the success of Google
  • We must focus on our goal
  • Our plans must be flexible

Objectives:

  1. To understand that uncertainty is normal and what we can do about it.
  2. To understand that precision is not the same as accuracy.
  3. To accept that unpredictable events are not outliers - they are normal.
  4. To understand that resiliency must be built in.

Session 2: Decision Making in a Non-linear World: What They Did Not Teach in Management Accounting?

All decisions are about the future, and the future is uncertain. In today's world, unpredictability is the rule, not the exception, and making business decisions can feel like rolling dice with ever-changing odds. We need better tactics and tools to improve our decision-making process. We must challenge the decision-making process itself, outdated assumptions, and uncover fresh insights that transform how we plan, decide, and succeed, showing that uncertainty doesn't have to mean instability - it can be the catalyst for smarter, stronger decisions.
  • Better plans require more planning, what do we need to change in our decision process
    • How to use the OODA loop and other decision models
    • New lessons from the Judgement of Solomon
  • Why do the best performing organizations always plan for the unexpected
    • Multiple scenarios always
  • Experiments always lead to success.
  • Tools to deal with randomness, including:
    • The Scientific Method, re-framing, and periodic reality checks
  • Choosing the right, relevant costs?
    • The sunk cost fallacy reexamined
    • Opportunity costs
    • Relevant costs for responsibility accounting
    • Product or process continuance or discontinuance
    • Fixed costs vs avoidable costs. Short run and long run
  • Decision dynamics: How can today's right decision turn sour tomorrow?
    • Unintended consequences
    • Selling surplus capacity
  • How can statistics be misused and misunderstood - thus increasing risk?
  • Harnessing sensitivity analysis, multiple scenarios, and other tools effectively.
  • Real options increase certainty by making us more flexible.
  • All risks are subjective, but we futilely attempt to quantify the unquantifiable.

Objectives:

  1. To understand why and how our current decision-making process is flawed.
  2. To discover what are some of the better plans and approaches to minimize uncertainty.

Session 3: Advanced Financial Analysis: Choosing the Right Tools in a World Full of Randomness

Humans are hard-wired to fear uncertainty, but we can learn from the ambiguity that is common today. The upside of uncertainty is that it is the gateway to new possibilities, including new tools. The analytical tools we currently use were designed for the physical world, but today we live in a data-driven digital world, especially for those in the service economy. What are the best tools to deal with unknowns and ambiguity in today's environment? We will show you how to use the right tools in the proper manner.
  • Advanced financial analysis and modeling tools
    • Proper modeling of long-term decisions
    • Best practices in project analysis
    • Alternative evaluation methods
    • Why should you consider multiple metrics
    • Capital rationing
    • Choosing the correct discount factor
    • Year-end convention and other less understood assumptions
    • Sensitivity and scenario analysis
    • Monte Carlo Simulation in practice
    • Interpreting results properly
    • NPV vs IRR vs MIRR vs ROI
    • Considerations when metrics contradict other metrics
    • Real options are hard to value but are invaluable
    • Behavioral issues
    • Evaluating projects with no obvious return
    • Multiple numeric examples and work sheets

Objectives:

  1. To understand why we need better tools to help inform decision makers.
  2. Discover how to use some of the more appropriate tools to use to help augment financial analysis in today's environment.
  3. To learn methods to navigate complexity and better plan for change.

Session 4: Diversification: A Risky or Risk Averse Strategy?

Diversification is often seen as a safe strategy to reduce risk, but when misused, diversification actually creates greater risk. Many organizations fall into this trap, with costly consequences. The intention for diversification is critical. Many organizations misuse diversification, and the blunders have been staggering. What lessons can we learn? How can diversification be implemented to achieve the intended goals? One key is to use a holistic approach, which we will elaborate and explain, only then will diversification be advantageous. Leaders, the Board, auditors, and team members must be aware of the myriad issues of diversification. Done right - diversification is a boon. We will explain what to do, how to do it properly - and what not to do.
  • Does diversification truly reduce risk - or not
    • Portfolio theory and how to use it properly
  • The differences between specific risk and systematic risk and how can we reduce those risks
  • The most common reasons why most organizations fail when attempting to diversify
  • What happened to conglomerates
    • Why conglomerates disappeared in the West
    • Why are conglomerates in Korea and India successful
  • Diversification via acquisitions
    • Is the control premium worthwhile
  • Which cost of capital (WACC) should we employ
  • What are the effective diversification methods and tactics that truly do reduce risk

Objectives:

  1. To understand why diversification usually increases risk.
  2. To learn the proper, effective way to diversify to reduce hazards?

Prerequisites

At least six (6) months of professional financial statement analysis experience and/or at least six (6) months of professional experience in preparing or reviewing accounting processes and reports; experience working with internal clients or external clients and business leaders.

Designed For

Managers who want to improve their financial analysis skills, develop a thoughtful approach towards risk and a method to optimize a practical strategy towards managing risk; corporate financial leaders, financial managers, CEOs, CFOs, controllers, accountants, board members, advisors, and consultants; CPAs in public practice and CPAs in industry; business owners, entrepreneurs, and professionals interested in financial analysis, managing risk and understanding the value of planning.

Objectives

See objectives listed above.

Leader(s):

Leader Bios

Don Minges, Principal, The Knowledge Institute LLC

Don Minges, MBA, is a fractional CFO who works in diverse industries at various stages. His expertise is in profitability enhancement, strategic planning, venture capital, mergers & acquisitions, consulting, turnarounds, economic forecasting, cost accounting and financial analysis. Don has experience raising equity and has invested equity into promising businesses. He has served on the Board of Directors for several firms. Don graduated with highest honors from the Fuqua School of Business at Duke. Don's mission is to increase the value of the business and to help leaders like you become more effective. His business is based in Charlotte, NC.


(1/30/24)

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Non-Member Price $410.00

Member Price $310.00

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