A Treasurer’s Perspective: Trends in Risk Management: Part II
James Lockyer | September 19, 2016 |
In my previous article, “A Treasurer’s Perspective: Trends in Risk Management”, I identified and discussed some of the key priorities and issues the Association of Corporate Treasurers (ACT) is seeing in the financial risk space from a treasurer’s point of view. With identifying the priorities out of the way, I’m now going to address how the ACT is supporting treasurers and their organizations through specific activities, member development and policy and advocacy.
The ACT runs a variety of activities to support our members and other stakeholders and wider treasury community in their risk management activities.
- Now in its fifth year, the Contemporary Treasurer Surveymaps key international trends across a range of topics. Headline feedback from the January 2016 survey includes:
- Capital and liquidity management followed by general risk management are top priorities for boards, reflecting the ACT’s overall priorities.
- 45% of respondents spend more time on risk management than a year ago; 44% report spending about the same amount of time.
- 37% expect to spend more time on risk management in the coming year, 39% more time on capital & liquidity management and 17% more time on treasury operations.
- 47% see the cost of credit as more expensive in 2015, and 68% expect it to be more expensive in 2016; 39% see this increased cost as having a net negative effect on the organization in 2016.
- 60% of respondents believe that financial regulation has a net negative effect on business due to factors such as cost, workload of compliance, and the irrelevance of much regulation to non-financial companies, and only 3% believe that regulation improves risk management.
- 46% are looking for higher qualified staff now than 5 years ago, which implies that professional bodies still have a clear role to play in providing appropriately qualified and supported professionals to businesses.
- Risk management is frequently the theme, or one of the themes, of our events, which are designed to be as accessible as possible and in a range of formats and durations to attract different audiences. Webinars are used to tackle highly topical themes, reach a worldwide audience and have a legacy benefit through recordings.
- Risk management is also explicitly addressed in the ACT’s qualifications and training programs, and the ACT is still the only organization to articulate a framework for non-financial businesses to manage financial risks, consistent with general risk management frameworks such as ISO 31000.
Member development support
- All of the ACT’s technical resources are free to members, and much is free to all.
- The ACT’s Treasurers’ Wiki is a moderated open source directory of treasury knowledge and very popular.
- We use social media a lot, and we maintain active general and regional LinkedIn groups and a WeChat group for China. Together with Twitter we find them good for encouraging debate, promoting thought leadership and raising profile. And we also interact with other groups such as the IFAC Global Gateway and LinkedIn groups.
- We are strengthening a progressive membership proposition linked to career progression with content – in the form of events and resources – targeted explicitly to member strata, e.g. by seniority and competency.
- We have developed a Competency Framework for treasury in conjunction with employers and learning and development teams from multinational companies around the world which provides a comprehensive framework for career and competency development, as well as placing (financial) risk management in the wider business context.
- Careers support, including in the development of business and behavioral skills and a mentoring scheme which has had excellent feedback from both mentors and mentees alike.
- Education – a flexible pathway of treasury and cash management qualifications as well as training, eLearning courses, skills diagnostics and in-company programs
- Case studies and discussion in events.
- Technical briefings and print content aligned to risk management issues.
- Special interest groups, a Treasurers Forum for quick responses to immediate issues, and a senior Advisory Board to advise the ACT on macro trends at a strategic level.
Policy & Advocacy
- The ACT makes extensive representation to regulators, governments and central banks across the globe. Besides advocating for non-financial firms and arguing the impact and unintended consequences of regulation primarily aimed at financial companies, we also comment on proposed changes in accounting standards and taxation issues.
- Collaboration with like-minded organizations / professional bodies: The ACT plays an active role in the European Association of Corporate Treasurers; it has strong relationships with IFAC, professional accountancy organizations, and other professional bodies, which help mobilize common interests and provide complementary perspectives on issues.
- Like many professional bodies, the ACT fosters senior advocates in organizations including private and public sector in order to grow credibility and reach for the brand, and to gain senior feedback on the needs in our markets and among our stakeholders.
These two articles have highlighted some of the challenges facing treasury specialists, and some of the ways in which the ACT provides support to its members and to the wider community of professionals working in the treasury space. Some 50% of the ACT’s members are Professional Accountants in Business (PAIBs), and the ACT is also working with IFAC, PAOs and the PAIB community to build enhanced capacity for individuals and organizations to meet these challenges, to better connect finance with the business, to take better informed decisions regarding threats to and opportunities for sustainable business success, and hence deliver appropriately risk-weighted returns for stakeholders.