Only 12 percent of organisations have full visibility over all their financial risk factors, according to a recent survey of corporate treasury and risk professionals conducted by Kyriba.
While more than two thirds say that they are actively taking steps to improve their risk visibility, over 20 percent of respondents have limited or no visibility into key exposures.
The survey also revealed wide variations in the areas where corporate risk professionals have the deepest visibility, highlighting that risk best practices are still evolving for many organisations.
Although almost half of respondents (44 percent) stated they have the most visibility into liquidity risk, with a third saying that their organisation’s own operational risk is the area where they have the best insight.
Surprisingly, more than one-in-five respondents have the deepest visibility into third-party risk factors, with foreign exchange/interest rate at 16 percent and counterparty risk at seven percent.
“Financial risk management – particularly managing foreign exchange, interest rate, and commodity hedging programs – has become more complicated with the increased volatility in financial markets,” said Robert Pierson, director of risk management services, North America, at Kyriba. “Combined with an emphasis on preserving cash and liquidity, corporate boards have placed a premium on protecting financial assets."
Pierson notes that perfecting visibility enables corporate treasurers to meet this mandate, and while it’s reassuring to see that most treasury professionals are taking the issue very seriously and improving their processes and controls, there is still a long way to go.
"For companies to have complete visibility of their financial risk exposures, they first need to gain a deeper insight into their own cash position and cash forecasting mechanisms. As more organisations move away from spreadsheets and adopt sophisticated treasury management systems for cash management, it will become easier for treasury teams to have deeper visibility into all risk factors,” notes Pierson.