Stake your claim now – or find yourself sidelined
Richard Raeburn, Chief Executive of the ACT, has issued a stark warning to treasurers over their future role within the organisation. His comments came in the context of organisations struggling to introduce effective enterprise risk management (ERM) practices. A major study, conducted jointly by the ACT and management consultancy Mercer Oliver Wyman, found that a host of barriers existed within European companies that prevented the implementation and use of ERM. Not surprisingly, the research focused on the role of the treasurer in the implementation of holistic ERM solutions.
Commenting on the research, Raeburn said: “Rising to the challenge of ERM is not simply a matter of persuading others in the firm. It also requires treasurers to educate themselves in new technical skills, best practices, non-financial risks and business strategy.
“Our research suggests that many treasurers prefer to accept the status quo, but also that things are changing. Treasurers have in the past been seen as the de facto deputy chief financial officer [CFO]. This might now be at risk as the focus of CFOs has moved to control/ accounting and strategic planning.
“As a consequence, treasurers may not be confident that they will step directly up to the CFO position and they cannot count on being left alone to manage their piece of the risk jigsaw forever. By taking a more proactive role on ERM, they will add value to the organisation and position themselves better as CFO candidates. The opportunity is there, and treasurers should grasp it.”
Treasurers have much to offer the organisation in terms of financial risk expertise, quantitative skill and market access. Risk has moved up the corporate agenda as business volatility continues to rise. And the profile of the treasurer should have increased in tandem.
Treasurers have traditionally never been good at explaining the role they perform and the value they can add within the finance function, never mind within the context of the enterprise as a whole. Treasury departments still have the opportunity to work with CFOs to deliver in the face of increased responsibilities. A few treasury departments have risen to the challenge, but not enough. Such modesty and reticence has to stop, both for the sake of the organisation and the sake of the treasury function.
PETER WILLIAMS
Editor
See Marketwatch Europe, page 07
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January 2007, which will include the results of the Deals of the Year.
McCreevy praises strong European capital markets
On the globalised financial playing field, it is important for politicians not to get “misty-eyed” over regulation, according to Charlie McCreevy, European Commissioner for Internal Market and Services.
The European Associations of Corporate Treasurers (EACT) has signed a memorandum of understanding with SWIFT to provide a framework for co-operation.
Fears emerge over the impact of private equity
Private equity deals on the corporate credit and debt markets are increasing risk and threatening credit quality, according to the FSA and Standard & Poor’s.
UK rail infrastructure company Network Rail is halfway through a £20bn multicurrency note programme underpinning its huge investment in the rail network’s tracks and signalling systems.
Rating agencies have announced a series of changes to methodologies recently, but are they moving the goalposts too often?
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Philippa Foster Back, of the Institute of Business Ethics, talks to Julia Berris.
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As banks gear up for SEPA’s introduction in 2008, the pressure is on to develop compliant products and processes. Banks must move more quickly with their development of SEPA migration plans and instruments. Technology companies estimate that the cost to a corporate of establishing a SEPA processing system is somewhere between €500,000 and €1m.
Andrew Barrie contrasts the recent developments in the UK pension and insurance industries, looking at the drivers for change and the critical lessons learnt by insurers.
The second breakfast briefing in the series on integrated risk management – organised by the ACT/AIRMIC Special Interest Group on Risk: Insurance and Treasury, and sponsored by Zurich Financial Services – continued to debate the development of an integrated approach to risk management based on best practice. At the meeting in October, ICI’s Group Treasurer David Blackwood and its Group Risk and Insurance Manager Ian Canham outlined their approach.
Citigroup’s own treasury department is split into two: a risktaking profit centre and a largely non-risk-taking cost centre. The latter has four key functions, including managing Citigroup’s FX exposures. As a global company with operations in more than 100 different countries, Citigroup’s global presence creates FX exposures in three key ways.
Since the 1980s the securitisation market has grown into a widespread financing and/or risk transfer technique used throughout North America, Europe, Asia and Australasia. Treasurers who are contemplating or have recently completed a securitisation transaction need to consider a number of accounting and tax developments.
Treasurers view their relationships with their bankers as one of their key responsibilities. Banks also take the relationship with their corporate clients very seriously. Sector knowledge, business-specific knowledge and an understanding of the individual treasurer all have a part to play in building the ideal banker/treasurer relationship.
Banks invest in technology innovation to gain market advantage. Hosted treasury management systems may suit banks better than in-house software because they require no maintenance and the supplier provides the continual investment needed to keep such solutions at the leading edge.
Credit markets have come under intense scrutiny from regulators. Credit derivative trading volumes have increased exponentially year-on-year since the market’s inception. The industry united to solve processing backlogs. Technology investment in operations rose by 32% in 2005. ISDA is working to unify the industry behind new mechanisms for trading and settling credit default swaps.
Justin Welby says that amid all the certainties of Christmas there is still the possibility of the surprise experienced by Scrooge.
As far as treasury recruitment is concerned, 2006 has been an exceptionally busy year. Indeed, I would go so far as to say that it has been the busiest year since the peak of the last boom back in 2000.
