by Frank Kutschera, Head of Cash Management Corporates for UK, Ireland and Scandinavia, Global Transaction Banking Division, Deutsche Bank
While commentators tend to refer to the global financial crisis as a specific occurrence that took place in 2008-9, it is clear to every treasurer that the crisis was not just a one-off event, but simply one phase of a longer period of change, volatility and uncertainty that is still being played out today. Risk management swept to the top of treasurers’ agendas in 2008, but rather than being superseded by other business needs, it has remained firmly positioned at the top of treasurers’ list of priorities.
Continuity and change
While its importance has not changed, the concept of risk management has shifted considerably over this period. In 2008-9, many treasurers found that their risk policies and models were not designed to take into account such extremes of volatility, and they therefore had to take remedial action. Since then, however, most treasurers have implemented robust risk management policies, procedures and reporting that are appropriate to a new economic era.
Consequently, risk management is now less about managing fear, and more focused on identifying ways to create competitive opportunity by reducing risk effectively. Since the global financial crisis, treasurers have found an enhanced role at the top of the organisation and many are using this mandate to extend their influence more widely across the business to anticipate and respond to business challenges. Consequently, treasurers are addressing not only traditional market risks, but also becoming more involved with commercial issues, such as credit and supply chain risk.
As a bank, we have always supported treasurers’ financial risk management objectives with risk expertise and solutions. The challenge facing us now is how to support these changing requirements and aspirations that require a greater depth of understanding of the needs and constraints of the wider business, not simply treasury. Furthermore, our role is also changing - treasurers are not only seeking our advice on the choice of solutions to address business challenges, but also asking us to share our experiences derived from working with corporations globally.