Building Corporate Resilience: Treasury Imperatives Now and Next

The initial shock of the Covid-19 pandemic is starting to subside and companies are moving out of crisis management mode into planning for recovery and beyond. Patrick Peters-Bühler, Principal – EMEA, Treasury Advisory Group, Citi, and Yan Li, Senior Adviser – Greater China, Treasury Advisory Group, Citi, explain how corporates can develop strategies to become more resilient in the face of future uncertainty.

“When life gives you lemons, make lemonade.” Although this proverb is typically used in the personal sphere, it applies to the business world too – in the form of corporate resilience. In simple terms, this is the ability to reduce vulnerability to crises and shocks and to take action to avoid, absorb, adapt, and recover quickly from such events. It is also about turning crises into opportunities to stay ahead of competitors.

Naturally, not every corporate is at the stage of ‘making lemonade’ just yet, since the impact of Covid-19 has varied by geography, industry and organisational readiness. Nevertheless, research undertaken by Citi’s Treasury Advisory Group demonstrates that positive steps are being taken to improve corporate resilience. As Peters-Bühler explains: “Through our work with corporate treasurers, we have identified four broad stages of corporate response to the pandemic. The first was the immediate crisis response and a handful of companies (3.3%) are still in this phase at the beginning of July. Next is the act of marshalling corporate liquidity, which involves everything from achieving cash visibility and control to resetting foreign exchange hedges. Over one quarter (26.7%) of corporates are currently at this stage.” (See fig. 1.)

The third phase is restoring cash profitability. “The focus here is to reduce Operating Expense, tactically review CapEx (capital expenditure), actively engage all stakeholders, and essentially shift from responding to the crisis to forward planning instead. The fourth and final phase is building for the emerging new landscape, a large part of which involves improving corporate resilience,” he notes.

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