The polycrisis and how it is affecting how the treasury community manages risk permeated the recent ACT annual conference. And yet there was an air of optimism among delegates as they described how their work was placing them at the heart of their organisations like never before.
Held at the ICC Wales in May, nearly 1,000 delegates from the corporate and banking world came together over two days to discuss key risk management topics, as well as swap stories around financing, sustainability and wellbeing.
Thimon de Jong, behavioural expert and founder of Whetston, introduced delegates to the concept of the polycrisis by listing the mounting pressures that the business world faces – rising energy costs, inflation and interest rates, together with geopolitical instability, talent shortages and, of course, climate change. Each one of these crises on its own would be hard, but not impossible, to tackle. However, when they are all combined, human behaviour changes and fails to respond. “Everyone looks to everyone else to find the lifeboat,” De Jong said.
To break this impasse, he urged delegates to engage with their teams – talk about mental wellbeing, reverse mentoring, technology and even their side hustles, but then convert that talk into action. “Great corporate treasurers are the ones that will embrace the crisis,” he told the audience.
Technology as a disruptive force was a further recurring theme at the conference, with a number of sessions looking at the impact that digitisation is having on treasury. However, panellists had a positive message to deliver. As Will Turner, HSBC’s head of strategic growth, partnership and innovation in the UK commercial banking division, said: “Technology can do the ordinary so that you can do the extraordinary.”
However, his colleague Laura McSkeane, an HSBC product manager, accepted that the level of technology “noise” was such that it could be difficult for treasurers to know where they should focus their attention. “Radical innovation needs to come with radical benefits,” she said. McSkeane and Turner also highlighted the impact that innovations such as APIs, Open Banking and Banking-as-a-Service (BaaS) are having on the treasury function.
“Treasury-focused APIs now mean you can tap into bank accounts in a way that works for you so that you do not have to leave your own systems,” McSkeane said. “And with Open Banking built to a single standard, lowering the barrier for fintechs, makes it easier to work with multiple banks. These are learnings that can be taken and applied in other areas.”
Payments is one such area, and as delegates heard, new payment technology and data is helping treasurers manage risk. “We have re-engineered how we think about [payments] data and how we leverage it to maximise what we do for our customers,” said Lee McNabb, head of payment strategy and research at NatWest.
“Payments is at the heart of this, and how we engage with our customer base, this goes all the way through from the end consumer to corporates and how we can make the experience better. ISO 20022, the new payments messaging standard, will bring a level of enhanced data. It will be more flexible, globally harmonised and will improve [payment] processing.”
Refinancing during a time of crisis also came under the spotlight. According to Marta Stojanova, a director in S&P Global Ratings’ leveraged finance team, refinancing has been the major driver of issuances recently. “2022 was the most active year, but uncertainty and volatility have affected corporate access to capital,” she said, warning: “If you have maturities approaching, start planning now.”
The recent demise of a number of banks in the US and Europe was also regular theme throughout the conference, highlighting the need to focus on counterparty risk. As Ian Chisholm, group treasurer at Grosvenor, reminded delegates: “Liquidity investment is a core part of the treasurer’s role, it is something that you need to do in every environment, remembering the importance of security, liquidity and yield, but in that order.”
Likewise, sustainability, and how it fits within both risk management and the transition to net zero, was never far from the top of the conference agenda. However, as Helen Slinger, executive director for the Prince’s Accounting for Sustainability Project, observed: “Setting targets is only the first step. What comes next?” Her co-panellists called for corporate treasurers to educate themselves on transition, engage with the conversation and place it at the front and centre across the whole of the enterprise.
Muhsin Alrustom, group CFO of the ASYAD Group in Oman, said: “Treasurers have earned their place at the table… transition has to happen through the treasurer and CFO.”
Philip Smith is editor of The Treasurer
Next year's Annual Conference will be held in Liverpool on 21-22 May 2024.
