Treasury Today Country Profiles in association with Citi

CFOs set to increase treasury risk budgets

Person paragliding in the misty mountains, causing a risk

The treasurer’s role as risk-manager is being frustrated by lack of resources. As FX volatility hits earnings, more support is coming, says CFO survey.

With earnings being hit by avoidable unhedged FX risks, corporates are facing a growing risk management challenge. As under-resourced treasurers step up to their position as strategic advisors to their CFOs, more resources can be expected: so says a new global survey of 200 CFOs and nearly 300 treasurers, conducted by HSBC and FT Remark.

According to survey results, the interest rate environment in many countries is hitting earnings, with 60% of all CFOs reporting an impact; 70% of respondents in the Americas indicated that their company has suffered amidst rising rates.

With more than 50% of CFOs believing FX is the risk their company is least well-placed to deal with, increasing volatility in currencies and an uncertain macro-economic and geo-political outlook is starting to bite hard.

Strategic costs

As CFOs are increasingly required to partner with their company’s CEO, treasury department leaders are being called upon to step up as providers of strategic support, the survey reveals. Although 73% of CFOs say the risk management role of their treasurer has grown, 57% report a lack of complete confidence in their treasury having the required skills to cope with the new demands.

The issue is one of resources. Whilst 57% of treasurers want to increase risk management expertise in their teams, they report that only 32% of CFOs have increased resources for their treasuries in the last two years.

Just over half of all treasurers saying changes in FX regulation will have a material impact on their risk management strategy in the next three years. In response, around two thirds of CFOs say they expect to provide extra resources to their treasuries in the next two years.

In practical terms, 59% of treasurers are expecting digitisation of processes to have a significant impact on their risk management strategy in the next three years; 57% see technology as an area in which they are keen to develop their team’s expertise.