After decades of expansionary politics and technological advancement facilitating global trade and mobility, it seems the world has taken a different turn.
Freedom of movement for people, goods and services is now being disputed, and we are seeing a drift towards protectionism and nationalism.
Rumblings on trade barriers and tariffs, sanctions against Iran and Russia, Brexit and Eurosceptic governments in several EU countries all evidence this trend.
As treasurers, we know about these changes simply due to the nature of our jobs. Our core risk management activities require us to follow and understand the macroeconomic and geopolitical trends, to carry out our jobs today and foresee potential challenges coming our way, from a treasury standpoint.
However, we should also ensure that we think about how these changes affect our organisations as a whole. For example:
In my view, the role treasury plays is twofold: first, treasury teams must have the right technical skills to effectively manage the financial risks for which they are directly responsible.
Markets have become more volatile and sensitive to geopolitical developments, and an appropriate risk management framework must be in place to protect the business from these.
Second, treasurers must engage with their organisations to understand wider risks faced by the business, to assess if and how these risks could eventually make their way back to their desks.
For example, current US trade policy could prompt businesses to relocate, change their legal entity structure, their funding requirements or FX hedging framework.
Sanctions additionally increase compliance costs, very often borne by the treasury teams, which get involved from a transaction banking and bank relationship management perspective.
The treasury function must develop a better interpersonal skill set
To stay ahead of these changes and foresee what impact they could have on treasury teams, we must engage proactively outside of our traditional stakeholder group. Individuals outside of the world of finance understand the flow of cash, the underlying flow of goods and services, and potential hurdles and bottlenecks.
To engage with the business as a whole, the treasury function must therefore develop a better interpersonal skill set: communication, negotiation, collaboration and project management, for example.
These skills should be developed as early as possible, starting at treasury analyst level, to ensure that all members of the team grow comfortable with engaging with a wider set of stakeholders, are able to hold more meaningful conversations and be effective business partners as they advance through their careers.
Such development opportunities can come from participation in cross-functional projects, or by training and personal development skills such as coaching and mentoring.
It is also important to give regular feedback on interpersonal skills: how can corporate treasurers improve on their communication skills? How could engagement with the business on a particular issue be better managed?
In a world that currently seems to be becoming more closed off, businesses must find a way to maintain their reach by being more agile and able to address the disruptions we are currently seeing and the potential difficulties in reaching suppliers and customers.
Treasury can be at the forefront of that evolution and develop the right set of skills in order to support the business in navigating these hurdles successfully.
Indeed, being able to communicate and collaborate with others is the key to a better-integrated business, and crucial in demonstrating when and how treasury can successfully contribute to the organisation.
Agnes Favillier is chair of the ACT’s Future Leaders in Treasury group
This article was taken from the October/November 2018 issue of The Treasurer magazine. For more great insights, log in to view the full issue or sign up for eAffiliate membership