McKinsey on Finance No. 87 is the latest edition of McKinsey's flagship quarterly publication for senior finance executives. This issue focuses on four interconnected themes: sharpening forecast accuracy in volatile environments, advancing FP&A from reporting to strategic advisory, activating portfolio management discipline, and preparing for the evolving CFO role.
McKinsey on Finance No. 87 is particularly valuable as a reference document because it synthesises insights from McKinsey's consulting work across hundreds of finance transformation engagements. Unlike survey-based research that captures what finance leaders say they do, this publication reflects what McKinsey has observed finance leaders actually doing — a meaningfully different and more reliable dataset.
Sharpening Forecasts in Volatile Conditions
The issue's lead article tackles the challenge every CFO faces: how to produce reliable forecasts when the external environment is unpredictable. McKinsey's recommendation is to move from single-point estimates to probability distributions — presenting forecasts as ranges with explicit assumptions, rather than single numbers that imply false confidence. Teams that do this consistently outperform on forecast accuracy by an average of 23%.
Advancing FP&A: From Scorekeeper to Strategist
A centrepiece article examines how leading FP&A functions are repositioning from historical scorekeepers to forward-looking strategic advisors. The transition requires three capabilities that most FP&A teams are still building: real-time data access, scenario modelling fluency, and the communication skills to translate financial analysis into clear strategic recommendations for non-finance executives.
Portfolio Management: The CFO's Underused Lever
McKinsey argues that most CFOs underinvest in rigorous portfolio management — the ongoing evaluation of which business units, products, and initiatives deserve capital, and which should be pruned. The issue includes a framework for building a systematic portfolio review process that evaluates return on invested capital (ROIC), growth potential, and strategic fit simultaneously.
The CFO Role in 2025 and Beyond
A forward-looking piece examines how the CFO role is evolving. Key themes: increasing involvement in technology investment decisions (particularly AI), growing responsibility for ESG financial disclosure, and a shift from quarterly earnings management to multi-year value creation storytelling. CFOs who can credibly communicate long-term value creation narratives are commanding premium valuations for their companies.
- Technology stewardship: CFOs increasingly own AI investment governance
- ESG disclosure: CFOs are responsible for climate-related financial risk reporting
- Multi-year value storytelling: moving beyond quarterly earnings guidance
- Talent: CFOs are co-architects of the finance function's skill transformation
The CFOs who will define the next decade are not the ones who produce the most accurate quarterly earnings — they are the ones who tell the most credible multi-year value creation story.— McKinsey & Company (McKinsey on Finance No. 87, Jan 2025)
Practical Implementation Checklist
- Replace your next point-estimate board forecast presentation with a probability distribution: show a base case, a 70% confidence interval range, and the tail risks beyond that range
- Build a portfolio management review into your annual planning cycle: for each major business unit and investment program, assess ROIC vs. cost of capital, growth potential, and strategic fit — and make explicit reallocation decisions based on the analysis
- Develop CFO-level strategic communication skills: practice translating financial analysis into three-sentence strategic recommendations that a non-finance executive can immediately act on
- Invest in ESG financial disclosure capabilities now: climate-related financial risk reporting requirements are expanding globally, and the CFO who builds this capability proactively will not be scrambling reactively in 18 months
- Build a multi-year value narrative: develop a consistent, data-backed story about the company's long-term value creation trajectory that you can tell credibly to boards, investors, and rating agencies
- Download the free PDF from McKinsey's website — it's one of the most information-dense free resources available for senior finance leaders
McKinsey on Finance No. 87 is a compact but substantive synthesis of the most important themes in senior finance leadership. The prescription — probability distributions over point estimates, portfolio discipline, strategic communication, and multi-year value storytelling — represents a coherent vision of what the best finance functions are already doing and where the rest need to go.
Key Takeaways
Present forecasts as probability distributions, not single-point estimates
FP&A transformation requires three capabilities: real-time data, scenario fluency, strategic communication
Portfolio management discipline is one of the most underused CFO levers for value creation
The CFO role is expanding: technology stewardship, ESG disclosure, and multi-year value narrative
This issue is available as a free PDF from McKinsey — valuable reference for any finance leader
Probability distribution forecasts outperform point estimates by 23% accuracy on average — a documented, measurable improvement
Multi-year value storytelling is increasingly what investors and boards assess CFOs on — it's a skill that can be built
