Insight & Analysis

Worried about risk? You’re not alone

Published: Nov 2022

The macro environment that chief financial officers are operating in has fundamentally changed, and anyone concerned about risk management is not alone, as a recent survey by U.S. Bank reveals. In fact, the CFO Survey reveals they are now facing a wave of challenges.

Have you ever wondered how you compare to your peers? Maybe you’re grappling with something, and you think the treasurers and chief financial officers (CFOs) at other corporations have it all figured out?

Worried about high inflation, digital disruption and talent shortages? Well, you’re not alone. According to a recent survey of CFOs by U.S. Bank, less than 15% of participants are ‘very confident’ in their ability to manage these kind of risks. And then there’s supply chain disruption to worry about, as well as the more long-term lingering risks like cyber-attacks and regulatory changes. So, if you’re struggling, you’re not alone. When it comes to high inflation, for example, only 4% of your peers are confident they’ll be able to manage it.

The 2022 U.S. Bank CFO Insights Report also revealed that improving risk identification and mitigation is now a top priority for 30% of CFOs. This is a shift from the 2021 survey when risk management was the least identified top priority. There has also been a shift away from prioritising revenue growth, which was a top priority for 21% of CFOs, compared to 35% from 2021.

When asked what the most interesting element – or biggest surprise – from these results is, Stephen Philipson, Executive Vice President at U.S. Bank Corporate and Commercial Banking, told Treasury Today that CFOs have experienced a mind shift.

“The CFO has shifted from playing offense to playing defence. We saw this in our survey results, and it echoes what we’re hearing in our regular conversations with clients. In playing defence, CFOs are focused on positioning their business to be able to weather the various economic environments we may experience in the coming year,” Philipson said.

It has been 16 months since the last survey. So, what has changed since then? Have things fundamentally changed or is it a case of ‘same but a bit different?’ Philipson notes there are several factors at play that are different this time around. “Since we last did this CFO survey, there’s been a large jump in inflation, actions by the Fed to tighten monetary policy, and the start of war in Europe.”

There are numerous other risks that CFOs are facing. Philipson continues, “At the same time, CFOs list talent shortage as their greatest risk. Any one of these factors in a given year would be a difficult challenge for a finance leader. Throw in lingering effects from the pandemic like supply chain disruptions and it really is a uniquely challenging time for a CFO,” he tells Treasury Today.

The survey – which questioned 750 finance professionals in businesses across the United States – revealed that when it comes to tackling inflation, most finance leaders are identifying ways to cut costs. The survey found that 35% were evaluating the credit risk of major customers, 32% are evaluating pricing, 31% are hedging against rising costs of certain commodities and currencies, and only 22% are evaluating salaries.

Also environmental, social and governance (ESG) concerns featured in the CFOs’ priorities. However, the report notes that “action lags intent” even though the majority – 69% – of finance leaders believe they have a strong role to play in ESG. There is a still a need to close the “say-do gap”, however. The report states that fewer than 40% of finance teams assess the diversity and inclusion credentials of third parties and investments. The same amount is assessing the risk that climate change poses to the business’s operations and supply chain. So, if you’re also struggling with these issues, you’re not alone.

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