by Paul Taylor, Head of Sales, Global Transaction Services EMEA, Bank of America Merrill Lynch
Treasurers are focusing on risk management more closely than ever and are using more sophisticated tools and techniques to manage their exposures. At the same time, the relationship between banks and corporations has fundamentally shifted, with treasurers expecting their banks to take on an increasingly advisory role.
Risk management has always been an important aspect of corporate treasury – but in the last few years this topic has become more central than ever. For today’s treasurer, risk management influences every decision, interaction and bank conversation. At the same time, this focus on risk is fundamentally changing the relationship between treasurers and banks.
While this has been precipitated by the financial crisis, the focus on risk management has continued to gain momentum in the last couple of years. Some corporations have withdrawn from certain markets, while others have had to redefine where and how they are able to place their cash.
Treasurers are focusing on a number of different types of risk, and these are often interconnected: market risk, which arises as a result of a particular event in the market, can lead to other types of exposure such as foreign exchange (FX) risk, interest rate risk, liquidity risk, counterparty risk and credit risk. Other key risk topics include commodity, compliance, reputational, operational and business risks.