In total, 70% of corporate chief financial officers (CFOs) said that their company suffered reduced earnings in the last two years due to avoidable, unhedged FX risk, according to a global survey of 200 CFOs and nearly 300 treasurers.
In the survey, conducted by HSBC and FT Remark, 58% of CFOs in larger businesses said that FX risk management is one of the two risks that currently occupy the largest proportion of their time, while 51% said that FX is the risk that their organisation is least well-placed to deal with.
Meanwhile, 72% of treasurers said that FX risk management is one of the most important aspects of their job and 53% said that they expect changes in FX regimes and regulation to materially impact their risk management strategy in the next three years.
“The survey shows the importance of corporates having robust risk management frameworks in place given the financial risks of not getting it right, especially in an increasingly uncertain world,” says Frederic Boillereau, head of global FX and commodities and head of global markets corporate services, at HSBC.
As CFOs have found their own roles evolving to one in which they become a partner to their company’s chief executive officer, they have increasingly called on the leaders of their treasury department to step up and provide greater strategic support, according to the survey
But while 73% of CFO respondents said that the risk management role of their treasurer has grown, 57% do not yet have complete confidence in their treasury having the required skills to step up to that new role. The survey shows that while 57% of treasurers do want to increase risk management expertise in their teams, only 32% of CFOs have increased resources for their treasuries in the last two years. However, there is optimism that their call is being heard, with two-thirds of CFOs expecting to provide extra resources to their treasuries in the next two years.
Digitalisation of treasury functions is seen as one trend that can help corporates deliver more effective risk management strategies. The survey shows 59% of treasurers say digitalisation is expected to have a significant impact on risk management strategy in the next three years and 57% say digitalisation is an area in which they are keen to develop their team’s expertise.