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Managing FX risk is core strategic challenge for treasury

Managing risk is the key mandate for most treasury departments and managing FX volatility is the main challenge, accord to Deloitte's Global Corporate Treasury Survey 2017

The survey found that:

  • more than half the treasurers surveyed said that FX volatility is a challenge, an issue exacerbated by political turmoil and Brexit;
  • three-quarters of respondents are not actively monitoring key risks using “at risk” measures, despite FX volatility being flagged as the biggest challenge faced by treasurers;
  • 43 per cent said that having visibility into global operations is a challenge, while 30 per cent cited insufficient technology infrastructure to support their department.

Treasury staff

Of the more than 200 companies in the survey, the majority (69 per cent) had fewer than 10 full-time employees (FTEs), while 8 per cent had more than 40 FTEs.

Mandate for treasury

The survey suggests that most companies see their treasury department as a risk management function, in charge of managing company risk and liquidity risk in particular. Deloitte's report notes: “Interestingly, 15% of respondents, distributed across all industries and revenue brackets, highlighted their mandate to become a profit centre – a shift from traditional treasury as a cost centre of past years.”

Strategic challenges

More than half – 52 per cent – of treasurers said that FX volatility is their main strategic challenge, while many also named the following challenges:

  • Visibility into global operations, cash, and financial risk exposures (43 per cent)
  • cash repatriation (40 per cent)
  • liquidity (39 per cent)

Deloitte's report noted: “A key concern around technology is the speed with which the market is moving and being able to identify ‘which train to jump on’, and the impact of banking and tax reforms is an emerging challenge.”

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