Le Magazine du Trésorier - n°63 - 3ème trimestre 2008 - (Page 9)

Results & Conclusions of A European Survey About Corporate Treasury Possible Roles within the ERM Processes OBJECTIVES OF THE SURVEY The main objective of this European survey on Enterprise (wide) Risk Management (ERM) was to identify whether or not there is a potential role for corporate treasurers into the process. In case of positive answer, what type of role could treasurers play? The survey attracted 33 answers from corporate treasurers across Europe. Despite a limited number of respondents, we drew interesting conclusions. In former articles (TMI n° 159), we identified reasons to include treasurers into the ERM processes or to give them the key driving role in structures where there is no room to justify a full time Chief Risk Officer (CRO). We also addressed some of the reasons identified to explain why some treasurers are sometime reluctant or not motivated to embark into ERM. Beyond these reasons, it was interesting to identify what treasurers need to acquire,to develop or to learn in terms of techniques (incl. soft skills) to possibly fulfill this ERM function (full results of the survey could be consulted on ture in Europe. Although existing rules remain local,we could suspect to soon have a European Directive harmonizing the risk reporting approach. Economic down turn, stock exchange turmoil, currency volatility, liquidity crisis, environmental concerns, reputation issues, explosion of commodity prices are some of the reasons to remain prudent and to prevent (financial) impacts of risk occurrence. Unfortunately, ERM is not a science; it is more a sort of art.“Our task is not to foresee the future but rather to enable it” said Antoine de Saint-Exupéry.As business volatility has increased, risk management has become an important topic for corporations worldwide.The recent wave of governance scandals has prompted regulators and shareholders to scrutinize risks and control frameworks more closely. ERM is no longer a theoretical nicety; it is now a practical necessity. treasurers are well fit for this function. They have an obvious opportunity to better position themselves within the group. We hope that the most motivated ones would be able to succeed in this quest. It clearly appears that ERM is not as institutionalized at corporate level as in the banking sector. Top managers still need to instill a better risk culture. The treasurers are not often directly involved in risk management. However, all companies questioned manage directly and specifically financial risks. 63% of respondents acknowledged that they personally only focus on financial risks.It does not mean that nothing is done in the non-financial risks area. It also appears that if and when something is done it is not always coordinated, widely organized and sometimes (even worse) not well communicated to treasury departments. It also shows the silo approach of risks. Risk notion remains assimilated by professionals as purely “financial” (as if no operating risks could be envisaged and risk management was compartmented). Fortunately, 50% of companies which do not have yet ERM process in place plan to implement one in the coming 24 months. POTENTIAL ROLE OF TREASURERS There is no doubt that the treasurer’s role has developed over the past years as risk management skills are used in broader business context. In some organizations, this has developed in a formal manner with establishment of ERM Committees and specific new roles for the treasurers. By benchmarking large multinational companies, our goal was to determine roles treasurers could play in ERM (i.e. part-time role; full responsible role; or no specific role apart from reporting to CRO). We wanted to validate these different options and to measure treasurers’ willingness and motivation for such a career development. It appears that ERM, NECESSITY RATHER THAN NICETY Corporations, in general, suffer from lack of information on best practices and benchmark in ERM. Every single effort to promote and reinforce the risk culture is welcome. The ERM is still at its early stages of development. The request for comments from Standard & Poor’s initiated in November 2007, for example, proves that things are changing. There are catalysts for developing a true risk cul- MOTIVATING FACTORS The main reasons for implementing ERM are: the corporate governance pressures (incl. national regulation as KontrAG, LSF or Tabaksblat,…), good business practices and in third position the competitive advantage it could give. FOCUS

Table des matières de la publication Le Magazine du Trésorier - n°63 - 3ème trimestre 2008


Le Magazine du Trésorier - n°63 - 3ème trimestre 2008