The findings of HSBC’s latest global Corporate Risk Management Survey should resonate with island businesses, according to Aline Ayotte, Head of Commercial Banking at HSBC Channel Islands and Isle of Man.
The survey, of 300 chief financial officers and more than 500 senior treasury professionals from multinational corporates across a range of sectors, reveals that Chief Financial Officers and Corporate Treasurers face more complexity compared to just three years ago, amid changing trade and economic corridors, ongoing macroeconomic headwinds and geopolitical risk. While managing an international business is not always a straight line, many firms remain optimistic about their organisation’s growth prospects as new technologies enable them to unearth and map opportunity from uncertainty.
Almost half (47%) of survey respondents say managing currency risk is an area where they feel their business is least well equipped. They also say the impact of inflation, and economic policies to help manage it, have made their projected revenue and costs in some cases inaccurate, with disruptions to supply chains delaying cash flow.
Nonetheless, many businesses are optimistic about revenue growth prospects in the near future. Key factors for achieving that include rising customer demand and quicker adoption of new technologies (both 75%), as well as a reduction in geopolitical tensions (52%). Some challenges are likely to remain, however, with 58% of respondents concerned about inflation and 55% worried about a prolonged economic downturn.
The HSBC survey also finds that ESG risk in supply chains is increasing in importance for treasurers. A growing number of respondents also expect to work with banks or other financial partners to support suppliers in their ESG efforts, but 27% also anticipate cancelling supplier contracts because of ESG issues over the next three years.
Tailwinds for businesses and their treasury function are expected to come from the emergence of artificial intelligence (AI). Some 61% believe AI will positively benefit their company’s profitability over the next three years, while another 61% believe it will become very useful for risk management decisions over that time frame.
Commenting on the findings, Aline Ayotte (pictured), Head of Commercial Banking, HSBC Channel Islands and Isle of Man, said: “As jurisdictions that are fully immersed in supporting the growth ambitions of globally-focused businesses, these results should resonate with firms across the islands. The key themes of AI, ESG, market complexity and geopolitics will be familiar to those working in corporate, treasury and risk roles locally and this research helps shine a light on those themes and provide some useful context as we continue to help businesses navigate the landscape.”
Rahul Badhwar, Global Head of Corporates Sales for Markets & Securities Services at HSBC, commented: “Companies continue to face multiple challenges that can impact their finances. Navigating interest rates, inflation and volatile FX markets, while also deploying risk management strategies to address them, has increasingly become an essential role of the corporate treasury function. In a world of uncertainty, we see companies wanting to mitigate risk and benefit from it, too.”
