Business environment changes bring new challenges

Global challenges such as market uncertainties and geopolitical unrest are hitting faster and harder than ever before, causing a ripple effect across countries and economies. For example, disruptions in shipping routes can cause carriers to be rerouted, delaying product delivery by weeks or even months. Disruptions like these have far-reaching implications for availability, pricing, trade agreements and more. Your business needs strategies to anticipate and respond to these risks.

Treasury directly strengthens an organization’s ability to withstand adverse events. By securing and optimizing funding, treasury ensures the business can sustain critical operations and respond to sudden market shifts. Financial stability becomes a competitive advantage.

As new risks surface, treasury proves its strategic value to the organization by demonstrating resiliency—quick, decisive responses to disruptions while maintaining core financial operations.

Building business resilience requires active collaboration between treasury, technology and operations to identify and address risks before they become crises.

Think to the future—‘what if’ and scenario planning

Because the risk landscape is volatile, treasury must proactively monitor the fundamental areas of risk and address them. Here are the most frequent types of risk and some strategic ways to build the resilience to confront them:

Where to begin building resilience

Strong treasury operations start with clear procedures that perform reliably under pressure.

Start with people

• Foster a culture of resiliency by encouraging adaptability through regular training. Workshops that simulate real-world scenarios, like challenges affecting supply chains, can help instill a resilient mindset among team members.
• Design training to help ensure that treasury has access to the necessary skillsets and that its people are cross-trained.
• Form partnerships across business functions to understand the realities of their activities and how different risk events can impact them. Treasury can then assess the financial impacts of the risks and respond accordingly, aligning with the goals of the wider organization and business units.

Optimize processes through technology

• Audit and streamline processes to eliminate inefficiencies and reduce manual work.
• Automate liquidity management to improve cash visibility and control.
• Deploy integrated technology platforms to connect treasury systems and data sources.

Focus on effective risk management and governance

Risk management

Treasury should develop a comprehensive risk-management framework that identifies, assesses and mitigates the financial impacts of the risks that confront the organization.

This framework should include:

• Managing compliance with regulatory authorities
• Formulating policies to manage activities—e.g., investment policies
• Building response plans for action during a risk event—e.g., cyberfraud, infrastructure failure, public health emergency
• Making effective use of financial instruments—e.g., purchasing insurance (transferring specific risks to an insurer) and investing in options (currency options, interest rate options, commodity options, etc.) to hedge against financial risks and limit potential losses

Track success with key performance indicators (KPIs)

Aligned management metrics provide insight into and accountability for an organization’s progress. These metrics enable management to flag potential risk events, inform employee activities, track progress toward goals and hold teams accountable for performance—all strengthening treasury’s resilience initiatives.

Implementing these risk-management strategies requires a systemic approach. Focus on four key objectives: assess, maximize, diversify and cultivate.