Chief financial officers (CFOs) and group treasurers in Asia Pacific from companies across the world have flagged the prospect of a global recession as a top risk for their business in the next six to 12 months, according to a survey conducted at the 2019 J.P. Morgan Asia Pacific CFO and Treasurers Forum in Shanghai this month.
Nearly one-third (30%) of more than 150 respondents from 130 global corporations ranked a potential global recession as the top risk to business, followed by 27% expressing caution over the impact of global trade tariffs and 24% over an emerging markets slowdown. Concerns over cyber security (10%) and the outcome of Brexit (9%) rounded out the top five risk concerns.
When it comes to the actions CFOs and group treasurers are taking in response to the global supply chain disruptions, most respondents (34%) said they exploring pricing options with suppliers, followed closely (32%) by those currently sourcing alternative suppliers. Some 15% said they were shifting production from China to other countries.
“Clearly, the concerns over the impact of headwinds in the global macro environment are front and centre in the minds of the top CFOs and treasurers of global corporations," said Oliver Brinkmann, head of corporate banking, Asia Pacific, J.P. Morgan. "While J.P. Morgan’s view is not for a recession, growth is expected to slow in the coming quarters, with global growth for 2019 forecast at 2.7% and dipping to 2.5% in 2020. We still see growth opportunities especially in emerging Asia but the geopolitical events are somewhat clouding sentiment.”
The finance professionals polled also pointed to the inefficient processes (25%), lack of technology (25%) and shortage of people resources (24%) as the top three challenges they face in future proofing their organisations. Half the respondents (50%) singled out artificial intelligence (AI) as the emerging technology that would play the biggest role disrupting traditional finance, followed by blockchain (28%), cryptocurrencies (15%) and quantum computing (7%).
“There has been a desire by finance practitioners to better harness data for predictive analytics and the advances in AI technologies in recent years have been a game-changer," said Brinkmann. "AI today has the ability to deliver meaningful insights and prescribe future actions in real time, and has been helpful for CFOs and group treasurers in optimising liquidity, increasing efficiencies and preventing fraud.”
Those surveyed appeared ready for e-commerce, with 45% stating they have an e-commerce strategy in place and 21% saying they are in planning phase. They cited the multiple collection channels, cybersecurity, incoming reconciliation, and processing chargebacks and disputes, as the key challenges in managing e-commerce transactions.
“There is no question that the e-commerce space continues to grow at a rapid pace," added Brinkmann. "Asia Pacific already comprises more than half of the global e-commerce volume and is expected to increase its share to 70% by 2022. Migrating commerce activities onto electronic platforms is no longer an option; it has become inevitable for most businesses."
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