RegionsNorth AmericaUS CFOs More Confident of Managing Risk in 2014, says TD Bank

US CFOs More Confident of Managing Risk in 2014, says TD Bank

America’s middle-market and corporate chief financial officers (CFOs) are more confident about both their organisations’ ability to manage financial risk and the financial prospects for their companies, indicating the potential for increased business investment in the months ahead, reports TD Bank.

The bank polled senior finance executives, including CFOs, comptrollers, treasurers and directors of finance, across the US for their perspectives on financial risk management and their thoughts on the overall economy. The survey, conducted in September and October 2013 by ORC International, gained responses from 150 executives, half at companies with annual sales of US$50m to US$250m (middle-market) and half at companies with annual sales above US$250m (corporate).

“What we’re seeing, both through this survey and in our interactions with clients, is a more positive outlook about the economic environment and the business opportunities coming out of the recession,” said Greg Braca, executive vice president (EVP) and head of corporate and specialty banking at TD Bank.

“Well over a third of the CFOs surveyed expressed that they’re more confident in the US economy, and more than half viewed their organisations’ prospects in the same vein. CFOs feel better equipped to manage risk, which will enable them to take a more active approach to investing and expansion, even if the economy improves at a slower pace than we’d like.”

Nearly two in three survey respondents reported being more confident in their ability to manage risk, with 25% of CFOs sharing an increased appetite to take on risks. The enthusiasm is tempered somewhat by the prospect of future regulatory change and uncertainty, with more than a third of respondents naming regulation as their top concern moving forward.

Many respondents said that since 2008, their organisations have taken proactive measures to manage risk through internal controls and procedures, increased accountability and evaluation of business relationships. The TD Bank survey found that more than a quarter of organisations addressed concerns, primarily by:

  • Increasing visibility into the company’s cash position (49.7%).
  • Increasing and enhancing risk reporting (38.3%).
  • Adopting a more conservative approach to financial risk (36.9%).

Looking beyond their internal risk management practices, executives reported strengthening their evaluation of their vendors’ and suppliers’ risk management practices (44.3%). In fact, 40% of the organisations terminated business relationships where the company carried too much risk. Middle-market executives were more likely than their corporate counterparts to terminate these relationships, and more than 35% reported managing vendor relationships as one of their top risk management challenges.

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