Survey: 52% of firms face greater earnings uncertainty today than three years ago
The 2016 AFP Risk Survey cites financial factors, commodities and other external reasons as the top drivers of earnings uncertainty.Bethesda, Md. -- Earnings uncertainty will continue to plague organizations this year, according to a new survey by the Association for Financial Professionals.
Full results of the 2016 AFP Risk Survey, supported by Marsh & McLennan Companies’ Global Risk Center, are available at www.AFPonline.org/RiskSurvey.
The 2016 AFP Risk Survey interviewed 335 treasury and finance professionals. Among the key results:
- Earnings uncertainty has increased for over half of all organizations (52 percent) compared to three years ago.
- The top drivers for earnings uncertainty include commodity price fluctuation, financial factors such as credit, liquidity, interest rate and currency/FX risk, and other external factors.
- Fully 52 percent of survey respondents believe that accurately forecasting risk will be more challenging three years from now. Only 15 percent predict it will grow easier.
- Corporate practitioners are most concerned about increased cost of financing and currency translation risks.
“Against a background of worldwide crises and economic skepticism, treasury and finance professionals need to equip themselves with the tools and resources to effectively manage risks and stay ahead of the curve,” said AFP president and CEO Jim Kaitz.
Despite the earnings uncertainty, and the increasingly difficult task of accurately forecasting risk, the 2016 AFP Risk Survey also found that only half of organizations have plans in place to respond to, and reduce, interest-rate risk and commodity price fluctuation.
“To help organizations respond to the increasingly interconnected global economy, treasury and financial leaders must ensure their analysis and management of risks is equally interconnected. Most importantly, the analysis must be considered in the context of the corporate strategy and risk appetite to ensure financial success in the face of continued volatility,” said Marsh & McLennan Companies’ Executive Director of the Global Risk Center Alex Wittenberg.
Headquartered outside Washington, D.C., the Association for Financial Professionals (AFP) is the professional society that represents finance executives globally. AFP established and administers the Certified Treasury Professional and Certified Corporate FP&A Professional credentials, which set standards of excellence in finance. The quarterly AFP Corporate Cash Indicators serve as a bellwether of economic growth. The AFP Annual Conference is the largest networking event for corporate finance professionals in the world.
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