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The Business of Treasury 2022: treasurers on high alert

“Financial risk management, always core to the treasurer’s role, has climbed back up the agenda particularly in the light of inflation, market volatility and, more recently, geopolitical issues,” according to The Association of Corporate Treasurers’ (ACT) recent Business of Treasury 2022 report.

“All this makes the treasurer and their treasury team busier than ever. Add geopolitical uncertainty, inflation and interest rate rises into the mix, and treasurers have to be on high alert,” cautions the report. It notes that treasurers are never too far away from the next big unknown or unexpected event, and to respond effectively, they will need all the resources, data and experience they can gather – all while keeping an eye out for the next crisis.

This 10th annual edition of the ACT’s Business of Treasury research included responses from 181 treasurers worldwide. Among the respondents, 44% describe themselves as leading the treasury function, 45% hold another treasury role and the rest hold other roles such as CFO. On average, respondent treasurers have spent 4.9 years in their current role.

The Business of Treasury survey aims to understand the treasurer’s role and how this is evolving over time. The research addresses current and future hot topics and areas of concern so that the ACT and the treasury community are better equipped to face the challenges ahead.

Biggest external concerns: cybersecurity, inflation, uncertainty and interest rates

Geopolitical uncertainty, inflation and interest rates are interconnected concerns that are accompanied with financial risks. Cybersecurity has become the primary area of concern, followed by inflation, which is a new area of research in 2022. “Many treasurers will never have worked in a high-inflation environment before, which explains why inflation is now the second highest external concern for treasurers, alongside geopolitical uncertainty,” states the report.

The survey suggests that treasurers will spend more time on risk management in the future, and the events of the past two years as well as the Russian-Ukraine conflict “prove why the treasurer has to maintain a laser focus on financial risk.”

More treasurers are involved in defining strategy

Treasurers have long served as good business partners, but this year, respondents report a real shift.

Treasury has transitioned from reactive to proactive. The treasurer now has a permanent role as adviser to the board and is making more strategic contribution than before.

Source: ACT survey, Business of Treasury 2022 report

“We can now say with confidence that treasurers have become more influential as a result of the pandemic. For the first time in nine years treasurers are weighing in more on defining strategy rather than just providing information to contribute to it. That said, it is treasurers with greater longevity in a role who are most likely to be involved in defining strategy (66%),” the report further added.

Treasury’s biggest challenge: recruitment, people management and employee wellbeing

Treasurers’ biggest worry this year is around human resources (HR) matters. Recruitment and people management, including looking after staff wellbeing, are the top concerns for treasurers in terms of professional and business challenges. “This isn’t surprising. Treasurers have had to shift their team in and (potentially) out of working from home, at short notice, while rethinking the wider transformation of their workplace,” the report explains.

The survey says that it’s becoming more difficult to recruit and retain staff, and this is likely to intensify in the short to medium term. These are testing times for treasurers, as there is enormous churn in the treasury jobs market. Over half of the FTSE20 non-financial corporates have seen a change of group treasurer in the past 18 months.

People are also commanding higher salaries generally. Treasurers are worried about getting the right people in the right roles, training them adequately and managing them in a changed or virtual environment.

Respondent treasurers with over 20 years of experience identify lack of leadership and strategic skills as their biggest barrier to career progression. For less experienced treasury professionals, effective working skills (such as time management) are the greatest concern.

Embracing technology and ESG

Sixty-six percent of 2022 respondents said that the COVID-19 pandemic has increased the adoption of new technology, compared with 55% in the 2021 survey. In 2022, another 66% expect to spend more time on technology, up from 58% last year.

Source: ACT survey, Business of Treasury 2022 report

Companies appear to be investing more into artificial intelligence (AI) and machine learning (ML) technology: investment levels are up among 39% of treasurers, vs. 27% in 2021. The survey found that, in 2021, companies with a higher turnover (>£10 billion) tend to invest more in new technologies – significantly more in automation (90%) and AI and ML (52%).

According to the research report, concern about environmental, social and governance (ESG) is greater and more urgent than ever, but the level of ESG funding is only increasing slowly. With more pressure for reporting and transparency, engagement with ESG is expected to grow. In this year’s survey, 65% of treasurers say they will be more focused on ESG over the next 12 months.

Conclusion

The Business of Treasury 2022 report comes at possibly the most volatile period in the 10-year life of the research.

While capital and liquidity management remain at the heart of the treasurer’s work, there is a ramp-up across other activities as treasurers face a cavalcade of challenges – cybersecurity, inflation, economic uncertainty, interest rate hikes, recruitment and retention of staff, and the biggest geopolitical crisis in decades, the Russia-Ukraine war.

The current crisis is expected to have a significant impact on corporations and, as a consequence, their treasurers. They will be working in a whole new context and will have to remain vigilant to spot the next crisis or risk that can affect their organization’s fortunes. Treasures must be prepared for whatever comes their way, and that means they have to be on high alert. 

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