Risk management has always been a key part of the treasurer’s job description, but at times of crisis it becomes fundamental. So, as I begin my term of office as president of the ACT, I am encouraging treasurers to look at their skill set and identify any potential gaps in their armoury.
It has been a tense few weeks for the global financial system, with recent bank collapses stoking fears of another financial crisis. It might be too early to say where this will end, but a key question that will be answered is whether or not we have learned the lessons from the previous financial crisis.
Irrespective of the answer, this is a good time for treasurers to look at the governance within their own businesses, the risk portfolios, and counterparty risks. In any crisis, whether it’s a banking crisis, pandemic or energy crisis, we must all look at the broader context and work out where we are as a business. That could be within the enterprise itself or the wider business ecosystem – sector, industry, and even country level.
Then we need to translate these wider business risks into our own areas. Are we reflecting these risks; are we engaging with the business; are we moving out of our own silos? To do so, we need to engage with the whole business. This is not just during times of crisis – we should be acting as business partners and talking with other functions throughout the business during the good, as well as the difficult, times.
There are, of course, other long-term risks we need to take account of, notably the whole area of sustainability. This will require a commitment to updating skills so that we are ready to engage with the business at this new level. It will also require us to build the right teams, reduce bias, and create diversity of skill sets and of thought.
There is no doubt this will continue to be a challenge for the treasury profession – is sustainability treated as a niche topic, or is it truly embedded into treasury thinking and processes? That is not to say that corporate treasurers should be doing the work of the ESG team – far from it – though the eagle-eyed will have spotted that I am now head of sustainability at PageGroup, having previously been its group treasurer.
However, it is clear that sustainability can cut across multiple operations and functions. It is through this lens that sustainability affords us an opportunity to review our finance providers: are they a responsible employer; what is their commitment to diversity; what is their environmental impact? For example, have you taken a deep dive into your investment portfolio and asked whether it matches your organisation’s sustainability ambitions?
We also need to acknowledge that green and sustainable financing is no longer a niche product; it is fast becoming the mainstream. In this respect, treasurers need to understand that, as a bank’s customer, their company’s environmental impact affects the bank’s carbon emissions reporting and, therefore, will affect whether a bank can offer you financing and even transactional banking.
To tackle these emerging risks, and the risk of being left behind, treasurers need to ensure that, individually, their skills are up to date. The ACT provides a wide range of CPD courses and qualifications, as well as plenty of networking opportunities where you can share best practice, so please take advantage of these resources and get match fit. That way, we will all be able to fully support our organisations during these testing times.
Joanna Bonnett is head of sustainability at PageGroup and president of the ACT
This article was taken from Issue 2, 2023 of The Treasurer magazine. For more great insights, members can log in to view the full issue. If you're not an ACT member, you can sign up for eAffiliate membership.
