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Treasurers in the spotlight to manage COVID-19 business risks

As COVID-19 continues to rattle markets around the world, corporate treasurers have been thrust into the spotlight as their function has suddenly become a critical line of defence for the survival of their companies, research from Bloomberg and Greenwich Associates has found.

The poll of treasurers, CFOs and financial analysts looked at the demands corporate treasurers are facing during the ongoing crisis, how they are responding to those demands, and how they see the future of their profession post-pandemic.

Asked to describe the additional demands treasurers are facing in the current crisis, 33% of responses from the survey audience indicated that they have been asked by their company’s leadership to secure funding during the crisis, and 32% of responses indicated they have been asked to manage business continuity. This was significantly more than the 19% of responses that indicated they were asked to reduce costs, and the 14% that indicated they have been asked to defer costs.

Given the level of disruption the virus has caused, corporate treasurers are also looking more closely for credit risks in their supply chain and client base. Asked to name how they are dealing with increased risks, 44% of responses from treasurers indicated they are more closely scrutinising credit, receivables and financing from their customers and suppliers. 38% of responses indicated they are increasing conversations with their lenders, and 15% of responses indicated they are expanding their hedging programmes. Only 1% of responses indicated their risk management stance was unchanged.

“The pandemic is making the role of corporate treasurers more important than ever before,” said David Tamburelli, Bloomberg’s head of Workflow Specialists in North America. “Treasurers are at the centre of the crisis, being asked to play a more strategic role to ensure adequate funding and to protect the firm from risk - something that the study predicted.”

The poll was conducted during a Bloomberg webinar on Greenwich Associates’ recent report, ‘Changing KPIs force treasurers to improve their risk technology’, by Ken Monahan, senior analyst at Greenwich Associates.

“One of the most intriguing results of our poll was that it revealed the most important risk focus for treasurers is the credit position of their supply chain and customers,” said Monahan. “This even rated above improving relationships with their own creditors. This is interesting because the most observable phenomenon has been the rush to funding. The scrutiny of the supply chain and the customers goes on behind the scenes but is a top priority nonetheless.”

Asked to predict how the role of their department would evolve post-crisis, treasurers believe they will be asked to focus more on risk management (35% of responses) and supply chain management (27%). Additionally, 21% of responses believe treasurers will be required to hold greater reserves, and 14% of responses believe they will be required to draw up expanded disaster response and business continuity plans. Only 1% of responses indicated that the crisis was such an outlier that it would not have any effect on corporate treasurers’ responsibilities.

 

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This item appears in the following sections:
Risk Management
Financial Risk Management
FX Hedging & Risk Management
Strategic Treasury
Trade & FSC Management
COVID-19
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