The Modern Treasurer: Navigating Evolving Risks

Today’s Treasurers face a rapidly evolving and complex landscape, driven in part by innovation in the banking sector and advancing technology.

Broader macroeconomic factors have also had a major impact across the business community, whether you’re a growing scale up or an established multinational.

Over the past decade, the responsibilities of the treasury function have expanded like never before. A recent survey revealed that 77% of treasury professionals expected their responsibilities to grow in the next year¹.

While Treasurers still manage banking, forecasting, liquidity and working capital structure, they now have to contend with daily cash management (often in an increasingly global market), FX and interest rate risk management, as well as complex technology suites and stringent compliance.

And this transition isn’t slowing down.

In fact, the challenge grows as technology and financial strategies evolve. Today’s Treasurers are most likely to feel this shift across three emerging focus areas:

• New technological ecosystems
• Increased asset diversification
• Enhanced ESG (Environmental, Social and Governance) mandates.

Against this backdrop, how can Treasurers embrace change without losing focus on their key responsibilities?

Technology adoption: the role of data-driven decision making

Between APIs, embedded banking, artificial intelligence and machine learning, the banking market has undergone radical upheaval in the past decade.

For Treasurers that means navigating new networks and managing a myriad of programs as they integrate advancing systems and technologies in nuanced markets. This can be a major administrative burden and time drain, with multiple logins, relationships and security processes to manage at the same time.

In addition, rather than relying on one legacy banking provider, many now use multiple banking solution partners for real-time cash flow, streamlined payments and reconciliations, and liquidity management.

Fintechs that offer specialised solutions such as payment gateways or cross-border payments, alongside traditional banks and business management software, are expanding the Treasurers ‘finance stack’, fast.

It’s easy to understand why.

These tools help Treasurers process a huge amount of data to make quick, informed decisions. They underscore a growing expectation of the treasury as a more agile, responsive business function.

Although Treasurers have much better, up-to-date control over financial operations, and are arguably contributing more strategically to organisational success, this new ecosystem comes with enhanced risk.

There’s greater potential for fraud, higher costs to balance and challenges in managing multiple relationships and ensuring system interoperability.

Plus, Treasurers often bear responsibility for educating stakeholders to ensure confidence in the treasury’s effectiveness.

Although technological advancements are reshaping the banking landscape, treasury professionals are also adapting to evolving directives around asset diversification and ESG principles.

Diversification strategies: mitigating risk with segmentation

Thanks to major market movements and inflation squeezing margins, businesses of all sizes are seeking greater protection against counterparty risk. As a result, the focus on spreading resources across various providers and instruments like Money Market Funds (MMFs), bonds, and government securities has increased over the past two years.

Treasurers are now closely examining asset segmentation, partner and off balance sheet asset risk. Credit rating quality is being prioritised: while many continue to use challenger banks and newer financial products to handle specific processes, increasingly Treasurers may choose to trust larger legacy banks with higher credit ratings.

Given most reputable global banking institutions now offer innovative products and larger balance sheets, Treasurers can more easily reduce risk.

ESG pressures: balancing growth and ethical responsibilities

With a growing global emphasis on sustainable finance, the Treasurer’s responsibility for ethical, responsible growth is vast within modern organisations. This focus is largely driven by regulatory pressures, investor expectations, corporate reputation issues and risk management factors.

If you’re a corporate Treasurer, you’re likely managing financial risks related to climate change, ensuring reporting transparency and aligning financial operations with organisational ESG goals.

Yet many find it difficult to balance extensive (and growing) daily responsibilities with spearheading sustainable, longer-term initiatives.

Neglecting these duties means you risk jeopardising customer and employee loyalty, increased regulatory scrutiny, alienating stakeholders, and decreasing revenue/share price and may even have career implications.

In our experience, Treasurers can navigate this new playing field by:

• Addressing internal resource deficiencies
• Aligning capital and investment portfolios with corporate policies
• Enhancing visibility into ESG data
• Establishing minimum standards for banking providers and partners.

Preparing for the future: challenges and opportunity

Similar to the digital landscape Treasurers must now navigate, their role is one of continuous learning and adaptation.

From mitigating security and counterparty risk to enhancing operational efficiency through advancing technologies, the treasury is in the midst of a major transition, with both challenges and opportunities to navigate.

Embracing new technologies and fostering a culture of innovation, while remaining committed to fundamental treasury responsibilities, can help Treasurers transition into this new landscape confidently and effectively.