The role of the treasurer is broader than ever

Since the financial crisis of a decade ago, organizations have naturally wanted a more structured approach to managing risk and this has seen risk management become a board-level issue. As our Pre-Forum Survey reveals, the increased expectations of treasury are now a significant internal challenge. Treasurers – the “guardians of the balance sheet” – have seen their profile within organizations rise accordingly, and now work more closely than ever before with those at board and C-suite level. With that profile comes greater responsibility: a more analytic and strategic role in enabling the organization to deliver on its objectives and ambitions.

Emerging risks join established dangers

As they discharge these growing responsibilities, treasurers must be conscious of a much broader range of risks they must manage. Our Pre-Forum Survey found a wide range of challenges are regarded as significant, from traditional concerns such as market volatility and regulation, to emerging threats including cyber security and even Brexit. Clearly, the current market conditions – particularly the strength of the dollar and low interest rates – pose particular questions for some organizations, depending on their activities and exposures, but the broader issue is the array of risks that treasurers must now grapple with.

Capital allocation by strategic imperative

Treasurers play an increasingly prominent role in mapping their organizations’ capital allocation policies to their strategic objectives. Balancing the need to distribute capital to shareholders, whether through dividends or buybacks, is the imperative to invest for growth, both organic and through M&A. Pension liabilities may be an additional challenge for some organizations. Treasurers must ensure their organizations’ capital allocation policies both reflect their attitude to risk and maximise the chances of fulfilling their strategic objectives.

Accounting change provides new opportunities

The forthcoming IFRS9 amendments to the accounting regulations on financial instruments represent an opportunity for treasurers to take a new approach to discharging their responsibilities effectively. The reforms will have a particular impact on banks and insurers but, more broadly, many corporates will welcome the opportunity that IFRS9 affords to access new financial instruments and to expand the treasurer’s toolkit, particularly around hedging risk. Whilst over half of delegates surveyed at the Forum foresee no change, nearly a quarter are still exploring the situation and 16% see IFRS9 as likely to see them use different products for hedging.

Communication is a core skill

Just as treasurers’ profile within the organization is increasing, so the function must learn to communicate even more effectively with a broad range of stakeholder groups – shareholders, rating agencies, banks and others, including internal groups across the organization. The ability to speak openly and honestly – with “one voice” – and to avoid nasty surprises can be a key differentiator in the marketplace.