As a business leader, when you think about what you can do to build resilience in your organisation, I’m guessing you don’t immediately think “treasury.”
But think again.
Resilience is the ability of an organisation to react to change to survive and evolve. Surely then, being able to call on alternative sources of funding and liquidity will make your finances more flexible to capitalise on unexpected investment opportunity. And isn’t it essential to understand the market forces or disruptive events that might impact foreign exchange rates or commodity prices if you’re compiling contingency plans to increase agility? And when banks tighten lending policies, wouldn’t innovative financing arrangements that enable your suppliers to access liquidity make your supply chain more reliable?
Adaptability, agility, reliability are just some of the characteristics of a resilient organisation. Your treasury and finance teams – if connected to your strategic planning – can help you build them.
This is becoming more acute as a host of global megatrends are accelerating the pace of change, causing more complex risks and unexpected opportunities. Whether it’s technological breakthroughs or demographic and social change, shifts in economic power or rapid urbanisation, climate change or resource scarcity, these trends will change how you do business in one way or another. As you build your strategies and plans to adapt to change and even capitalise on it, your finance and treasury teams can add value in that challenging environment. For treasury, that means focusing on these key building blocks:
Capital and Liquidity, Financial Risk Management and Treasury Infrastructure. The results?
- Capital and Liquidity: Secure and diversified funding sources; “Real-time” visibility into cash position globally; Flexibility to fund and invest globally; Comprehensive scenario view in capital and liquidity planning
- Financial Risk Management: Comprehensive inventory of key risks; Advanced risk analytics including scenario planning; Formalisation of risk appetite and tolerances; Plans to deal with potentially disruptive market events
- Treasury Infrastructure: Flexible operating model well-aligned with business; External orientation, global perspective and strong analytical skills; Flexible and scalable technology architecture; Strategic approach to selection of external partners; Leading-edge transactions processing products, services and tools
If you want to find out more about how a strategic approach to treasury can enhance strategic resilience, I encourage you to read any of the documents here on our Resilience Journal site. Otherwise, contact me directly.