Navigating Economic Volatility: The CFO’s Defining Challenge of 2024–2025
The stock market in 2025 has been tumultuous and economic uncertainty is impacting businesses in all industries.
A Perfect Storm for CFOs
An unprecedented wave of economic volatility has emerged as the single biggest pain point for chief financial officers in 2024–2025. Across industries, CFOs are grappling with soaring inflation, rising interest rates, geopolitical conflicts, and recession fears – a combination of risks that one survey described as “the most challenging collision of macroeconomic risks in decades” . These forces have converged into a fog of uncertainty that dominates boardroom discussions and financial plans. Recent polls of finance leaders underscore the urgency: 70% of CFOs in one global survey are “very concerned” about macroeconomic conditions’ impact on their business , and 66% say economic volatility now poses as great or greater a threat than it did a year ago . As stewards of enterprise value, CFOs find themselves “fog lights guiding their organizations through the storm” of instability . The scope and scale of uncertainty today is testing even the most seasoned finance chiefs, forcing a fundamental re-examination of forecasts, investments, and risk appetites.
“Economic volatility is the top risk on CFOs’ minds this year.” – 2024 CFO Outlook Survey
The Cascading Macro Risks Behind the Uncertainty
Multiple intertwined factors are fueling this volatile landscape, creating headaches for finance leaders everywhere:
Stubborn Inflationary Pressures: After decades of relative price stability, inflation surged to multi-decade highs in the early 2020s. More than three-quarters of CFOs (76%) identified inflation as their top external risk for 2024 . Persistent input cost increases are squeezing margins and consumer demand. In fact, 58% of CFOs now rank inflation as a leading threat to growth, a jump from just 33% a year prior . Compounding the challenge, many companies struggle to pass those costs on – in one survey two-thirds of CFOs said they were unable to fully transfer higher costs to customers, while facing “disproportionate price hikes from suppliers” . The result is eroding purchasing power and constant pressure on pricing strategies.
Rising Interest Rates and Cost of Capital: To combat inflation, central banks have aggressively raised interest rates, abruptly ending the era of cheap money. High borrowing costs and liquidity concerns now rank alongside inflation as foremost constraints on company performance in CFOs’ eyes . Deloitte’s CFO Signals survey found that “CFOs cited inflation/interest rates/liquidity impact” as the #1 factor that could constrain their companies’ financial goals in the next 12 months . Interest rate volatility has made financing, debt servicing, and capital allocation far more challenging, putting major investments on hold. One late-2024 pulse of finance chiefs revealed that 84% are delaying at least one investment until there’s more clarity on the economic and policy outlook . With the cost of capital at its highest in years, CFOs must balance cash preservation against growth initiatives in a climate where every rate hike or policy rumor can whipsaw markets.
Geopolitical Upheavals: Geopolitical uncertainty is weighing heavily on the corporate outlook, from war and sanctions to trade tensions and election-year policy shifts. In a recent PwC survey, 73% of CFOs said geopolitical uncertainty poses a moderate or serious risk to their business . The war in Ukraine, for example, sent energy and commodity markets into turmoil, affecting input prices and supply chains globally. Ongoing trade disputes and strategic competition among major economies have added further unpredictability to export markets, supplier reliability, and currency exchange rates. As one CFO observer noted, “ongoing geopolitical events … continue to present an unstable global environment” that finance leaders must closely monitor . Even in domestic markets, political developments can create whiplash: three-quarters of CFOs report focusing on downside risk in their 2025 scenario planning amid regulatory unknowns and an upcoming election . Simply put, today’s CFO must factor in world affairs as much as balance sheets.
Recession Jitters and Demand Uncertainty: With financial conditions tightening and geopolitics in flux, CFOs remain vigilant about the prospect of an economic downturn. Many are already seeing signs of a slowdown. In one middle-market survey, 32% of CFOs now predict flat or declining revenues in the coming year, a sharp rise in pessimism compared to only 18% who forecasted no growth the year before . Similarly, over 80% of finance chiefs surveyed by PwC expected a recession within the next six months (as of late 2022) – a grim outlook that has persisted into 2024. Even as some macro forecasts improve on paper, CFOs cannot ignore the “continued stubbornness of the major forces driving the economy” and remain cautious . Weak consumer confidence, potential dips in business spending, and unpredictable swings in demand are compelling finance teams to brace for multiple scenarios. More than half of CFOs (57%) say their company’s performance has become more volatile over the past year, and a further 36% expect even greater volatility in the year ahead . The threat of an imminent recession – or at least a bumpy growth ride – looms over budgeting and strategic planning in every industry.
Taken together, these factors create a complex risk matrix that is remarkably broad-based. Unlike sector-specific challenges of the past, today’s economic uncertainty spares no industry. Manufacturers face rising input costs and supply disruptions; tech firms contend with wary investors and currency swings; consumer businesses juggle pricing power against wavering demand. The common denominator is a macro environment in constant flux, testing the limits of traditional forecasting and financial management.
CFO Sentiment: Caution Amid the Clouds
With so many storm clouds overhead, it’s little surprise that CFO sentiment has turned decidedly cautious. Surveys of CFOs in late 2023 and early 2024 reveal finance leaders sounding the alarm about volatility and uncertainty:
Lower Confidence and Risk Appetite: By the end of 2023, CFOs had markedly dialed back their optimism about both the economy and their own companies’ prospects . In Deloitte’s Q4 2023 poll of large-company CFOs, 62% said it was not a good time to be taking greater risks, up from 59% just a quarter earlier . Only a scant 12% felt it was a good time for more risk-taking – an extraordinarily low figure by historical standards . This risk aversion reflects the ambiguous outlook: most finance chiefs simply aren’t willing to “bet the farm” when facing such an unpredictable mix of headwinds. As Steve Gallucci, head of Deloitte’s CFO program, observed, CFOs see “a continued stubbornness of…forces that are driving the economy,” which calls for a “more measured view” going into 2024 . In practice, that has meant cautious forecasts and defensive postures across the C-suite.
Top Concerns Unanimously Macro-Focused: In survey after survey, CFOs’ top concerns center squarely on external economic factors, far outweighing internal issues. Inflation, interest rates, and broader macroeconomic conditions consistently rank as the biggest worries. For instance, CFO Signals reported the top three factors CFOs expect to constrain financial performance are “inflation/interest rates/liquidity,” “macroeconomics,” and “geopolitics” . Similarly, a January 2024 survey of finance leaders by Jefferson Wells found that aside from profitability pressures, inflationary pressures and economic uncertainty are cited as the #2 challenge (by 32% of CFOs) . In other words, nearly one in three CFOs put the volatile economy at the top of their list of headaches – making it the leading concern after basic earnings performance. This is a striking consensus across diverse companies: economic uncertainty has effectively become the “enemy #1” for finance chiefs, eclipsing other typical concerns like competition, technology, or even talent shortages in many cases.
Struggle to Forecast and Plan: One immediate casualty of the current volatility is the ability to forecast with confidence. CFOs are finding that old models no longer hold in this see-saw environment. In PwC’s October 2024 Pulse Survey, an overwhelming 92% of CFOs admitted that accurately forecasting their business has become a challenge, with nearly half calling it a “significant” challenge . From exchange rates to consumer demand, the variables are simply too fluid. As a result, finance teams are constantly re-forecasting and gaming out ‘what-if’ scenarios, trying to anticipate the next interest rate move or geopolitical shock. This sentiment was echoed in the 73% of CFOs who report they’ve had to double down on scenario planning to cope with the uncertainty . The planning cycle has shifted from annual or quarterly updates to continuous, rolling adjustments as new data and risks emerge. One Fortune 500 CFO recently quipped that budget assumptions now come with an expiration date measured in weeks, not months. When nearly 46% of CFOs call forecasting woes a significant impediment , it signals how fundamentally the finance playbook is being rewritten by volatility.
Guarded Outlook Despite Pockets of Optimism: It’s worth noting that CFO pessimism is not uniform or unending – these leaders are constantly scanning for silver linings and adjusting stance. By late 2024, for example, there were glimmers of improving sentiment as inflation showed signs of easing and a potential economic soft landing appeared possible. Deloitte’s 4Q 2024 CFO survey recorded a marked rise in optimism for the year ahead, with 72% of CFOs expecting the economy to be in better shape a year out (up from just 19% in the prior quarter) . However, even this optimism is cautious and contingent. Finance chiefs remain acutely aware that the situation could reverse with the next geopolitical flare-up or policy surprise. Indeed, 56% of CFOs still name the overall economy as their most worrisome external concern for 2025, with 46% pointing to geopolitics and 44% to interest rates as ongoing risks . The lesson is clear: CFOs may seize on hopeful signs, but they are keeping their guard up. Any uptick in confidence is tempered by contingency plans in case the volatility returns with force – as, in many ways, it already has in prior cycles. This delicate balance of optimism and realism is now part of the CFO mindset.
Impact on the CFO Role: The New Financial Stewards
Beyond sentiment, the current climate is fundamentally reshaping the CFO’s role and priorities. Economic uncertainty is not a passing nuisance; it’s altering how CFOs lead and where they focus their energy:
Short-Term Resilience vs. Long-Term Growth: CFOs are being pulled in two directions. On one hand, they must batten down the hatches for near-term turbulence – shoring up liquidity, controlling costs, and protecting margins amid inflation and possible downturns. On the other hand, they cannot lose sight of long-term strategy and opportunities. This balancing act is evident in CFO agendas. Cost management has re-emerged as a top priority(for example, 36% of CFOs named cost control among their top three priorities for 2024) , yet growth and investment have not disappeared (43% cited driving growth as a top priority) . Many CFOs describe an internal mandate to “do more with less” – to keep investing in critical initiatives (digital transformation, innovation, talent development) while aggressively cutting waste and increasing efficiency elsewhere. It’s a delicate tightrope walk: finance chiefs are scrutinizing every spending decision through the lens of uncertainty, often running multiple scenarios (“recession”, “baseline”, “upside”) to decide whether to green-light a project. The pressure from boards and investors to deliver strong results has only intensified in this environment , pushing CFOs to find creative ways to meet quarterly targets without mortgaging the future. Many are responding by trimming discretionary costs, renegotiating contracts, and improving working capital to build resilience – actions that buy breathing room if sales dip or costs spike unexpectedly.
Elevated Role in Risk Management: Traditionally, CFOs manage financial risk, but today they are also de facto chief risk officers for a spectrum of external threats. Whether it’s modeling the impact of a potential interest rate shock, evaluating exposure to a possible trade embargo, or hedging against currency swings, CFOs are at the center of enterprise risk discussions. For example, faced with wild currency and commodity fluctuations, finance leaders have ramped up hedging strategies for inputs and exchange rates to cushion the impact of market swings . Enterprise risk management has climbed up the CFO agenda, with many CFOs leveraging new analytics and data to map out vulnerabilities. As Deloitte noted, finance chiefs are focusing on “leveraging enterprise risk management and technology-driven insights to drive agility” in response to this volatile risk climate . The CFO is often the one translating global risk trends into company-specific action plans – effectively serving as the nexus between external chaos and internal strategy. This expanded risk mandate has also meant closer collaboration with CEOs and boards on scenario planning. CFOs are frequently the voice of prudence in strategic debates, asking “what if” about downside scenarios and ensuring plans B and C are ready. The cascading uncertainties have firmly reinforced the CFO’s role as the steward of not just finances, but of overall organizational resilience.
Stress on Forecasting and Decision Cycles: As noted, forecasting has never been more difficult – and this is stretching CFOs into new competencies. Many finance teams are now embracing advanced analytics, AI, and real-time dashboards in an effort to navigate the fog. Over a quarter of finance departments are already using AI for forecasting, with many more pilots underway . The need for agility has prompted CFOs to overhaul traditional budgeting processes: rolling forecasts and scenario analyses are replacing static annual budgets. The cadence of decision-making has accelerated – CFOs must be ready to pivot strategies on short notice if a key assumption (say, Fed policy or commodity prices) changes unexpectedly. This requires not only tools and data, but a culture of agility in finance teams. CFOs are thus championing flexibility and rapid response, ensuring their teams can re-prioritize expenditures or reallocate capital swiftly when signals change. As one CFO remarked, “We plan for the best, but we’re prepared for the worst”, highlighting the hyper-vigilant stance finance leaders now take. This dynamic planning environment has essentially rewritten the CFO playbook, blending financial acumen with strategic foresight like never before.
Broader Stakeholder Engagement: Economic volatility has also thrust CFOs into a more prominent external role. They are frequently communicating with investors, lenders, and auditors about how the company is managing risk and safeguarding performance amid uncertainty. Analysts and boards want to hear directly from CFOs on issues like inflation’s impact on margins or how interest rate hikes are influencing capital strategy. Internally, CFOs are key messengers as well – educating business unit leaders about macroeconomic assumptions, guiding the organization’s mindset on belt-tightening or opportunistic investments, and even reassuring employees about financial stability during choppy times. The CFO’s voice carries significant weight in calming nerves or justifying strategic shifts prompted by external volatility. In essence, the finance chief often becomes the public face of prudence and stability, articulating how the firm will weather the economic storms. This high-profile role means CFOs must pair their financial expertise with clear communication and leadership under pressure. The credibility they build now – in explaining uncertainty and the company’s responses – can strengthen stakeholder trust long after the volatility subsides.
A Rallying Point for Financial Leadership
As 2025 approaches, economic volatility and uncertainty remain the defining challenge for CFOs – but also a unifying rallying point. This shared adversity is prompting finance leaders across sectors to sharpen their focus and band together on best practices for resilience. In an era where “uncertainty…has fogged the economic outlook” , CFOs know that they cannot eliminate volatility, but they can ensure their organizations are prepared for it. The intense pressures of inflation, interest swings, and geopolitical risks have, in many ways, re-centered the CFO’s mission on what truly matters: protecting the enterprise in bad times while enabling growth in good times. If there is a silver lining, it’s that this volatility is forging more agile, forward-thinking finance teams. CFOs now stand at the forefront of guiding their companies through unpredictability – a challenge that has tested their mettle and strengthened their strategic resolve. By treating economic uncertainty not just as a risk but as a catalyst for building resilience, today’s CFOs are turning a painful challenge into a powerful mandate for innovation, discipline, and leadership. In the end, the storm of 2024–2025 may well become a crucible that makes the finance function – and its leaders – more formidable for whatever lies ahead.
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References
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Deloitte CFO Signals – Q4 2024
Deloitte. (2024). CFO Signals™: Q4 2024 Report. Deloitte Insights. Retrieved from https://www2.deloitte.com/us/en/pages/finance/articles/cfo-signals-quarterly-survey.html
PwC CFO Pulse Survey – June 2024
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