Forty-three percent of treasury professionals consider macroeconomic risk (pace of GDP growth, inflation and interest rates) to be one of the most challenging risks to manage, according to the 2023 AFP Risk Survey, supported by Marsh McLennan. This figure is up 24 percentage points from 2021 when only 19% cited macroeconomic risk, as the most challenging risk to manage.
Additionally, 49% of survey respondents indicated that macroeconomic risk will have the greatest impact on earnings in the next three years. Fifty-two percent of survey respondents report that their organizations are currently exposed to greater uncertainty in earnings overall, and 53% believe their organizations’ earnings will be exposed to more uncertainty over the next three years.
Cybersecurity risks, cited by 50% of respondents, remain the number one most challenging risk for treasury professionals to manage. Furthermore, over 80% of respondents reported that their organizations are more vulnerable to cyber risk due to the expanded use of technology.
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Other key findings from the 2023 AFP Risk Survey include:
- Sixty-five percent of respondents reported that their organizations have plans to curb costs or control expenses in the next 12 months. The primary reasons cited for these plans were fears of recession and uncertainty in the economic environment (59% of respondents) and inflationary pressures (58%).
- To protect against instability with banking partners, nearly half of treasury departments appear to be focused on concentrating their organizations’ partnerships with larger banks for services (cited by 48% of respondents).
- Treasury professionals view treasury as adding value through risk management by demonstrating short-term and long-term financial sustainability (cited by 67% of respondents) and delivering insights on access to liquidity to meet obligations (66%).
“Treasury professionals have shown agility and resilience in supporting their organizations to cope in an uncertain global economic environment,” said Jim Kaitz, President & CEO of AFP. “As the outlook remains uncertain, business leaders will continue to look to treasury professionals to play an important role in helping to steer their organizations through a challenging environment by mitigating risk effectively.”
Reid Sawyer, Head of the Emerging Risks Group at Marsh, added: “The evolving risk environment calls for treasurers to broaden their risk management scope, develop robust risk intelligence tools, and strengthen collaboration with internal and external stakeholders. By aligning risk management strategies with economic trends and internal growth strategies, treasurers can proactively protect their organizations' financial stability and enhance their overall risk resilience.”
The 2023 AFP Risk Survey was conducted in May 2023 and received responses from 408 treasury practitioners from organizations of varying sizes representing a broad range of industries and global geographic regions.