Treasurers are facing an uphill battle in supporting their organizations’ long-term growth strategy. While they must face the expected challenges of competition and changing consumer expectations for user experience, they must also deal with an entirely new landscape of risk. From geopolitical unrest to public health crises, treasurers must navigate and limit treasury and trade risk exposure while enabling their organizations to thrive in an uncertain economy.
Navigating The Unexpected: Developing A Long-Term Treasury And Trade Risk Strategy, a PYMNTS and Citi collaboration, presents optimal strategies for enacting an agile trade risk strategy designed for long-term business resilience.
The role of the treasurer has changed from financial guardian to risk management strategist.
While treasurers still perform their traditional functions as financial guardians, they are now often tasked with developing new strategies for helping their organizations limit exposure to emergent risk. Managing risk long-term often requires treasurers to initiate an innovation strategy designed to accelerate an organization’s efforts to modernize aspects of treasury operations which may support resilient business growth — such as payments management and compliance monitoring.
The role of the corporate treasurer has evolved far beyond simply guarding an organization’s fiscal health: Today’s corporate treasurer must also serve as the architect of business growth, as well as the vanguard of digital innovation, across the entire organization. Yet investing in new technologies can be costly and produce uncertain outcomes, so treasurers must often examine the value of potential digital innovations within the context of long-term business goals.
However, investments in new technology may drive up both capital expenditure (CAPEX) and operating expenditure (OPEX) costs over time, so each new innovation requires accurate forecasting data to ensure that the return on investment (ROI) is substantial and synced to long-term fiscal objectives.
Innovation is becoming a form of risk.
Treasurers face risk even as they develop a risk management strategy — the right tech stack can help limit long-term risk and the wrong tech tools can amplify costs and damage financial goals while having little effect on immediate risk exposure. Here, treasurers serve to guide digital transformation decisions from the point of view of long-term risk management and healthy ROI. Their goal, per the report, is to find the right tech tools to support business resilience and growth over time.
Modern treasurers need tools that provide tangible and immediate value to their evolving role, such as real-time algorithmic decision-making features that improve forecasting accuracy and multichannel transaction visibility, which can ease global compliance efforts.
The report states that treasurers must now look at risk management with a new sense of urgency. As uncertainty in the marketplace grows, competition will increase due to downstream pressure, and vulnerabilities to endemic risks — such as currency exchange volatility and compliance challenges — will be even more impactful on business growth.
Treasury and trade risks are frequently interconnected, and as organizations expand to new digital channels and operations scale, these interdependent risks are often amplified.
Treasurers must seek risk management as key to growth.
Treasurers’ best option, per the report, is to create a proactive strategy for risk management which focuses on using best-in-class digital tools to limit risk, manage treasury operations and support long-term growth. Treasurers should seek not only efficiency in payments and liquidity management, but transparency — central to compliance and accurate financial forecasting.
Global businesses need true visibility over digital channels and data. The speed and borderless nature of digital payments makes compliance and transaction visibility more dependent on treasurers having access to a technology stack or TMS capable of minimizing risk at scale.
To learn more about how treasurers can manage long-term risk, download the report.
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