I recently attended EuroFinance's annual flagship conference, International Cash & Treasury Management, in Vienna, Austria. The conference provided a great platform to launch a new Economist Intelligence Unit (EIU) report, Managing risk in challenging economic times, sponsored by Deutsche Bank. The session was part of the main afternoon programme and brought together leading corporate treasury executives to discuss how to manage risk in challenging economic times. The panelists included Tony Glasby, VP treasurer, PayPal; Mark Kirkland, group treasurer, Constellium; Alasdair Ross (chair) from The EIU; and Michael Spiegel, head of trade finance and cash management corporates at Deutsche Bank.

The session discussed the key issues covered in the report: the key macro and financial risks that corporate treasurers of large multinational corporations face, how they intend to manage them over the next 12 months and what the evolving risk landscape means for the day-to-day role of the treasurer, the skill set required of treasury professionals, and the technological trends within corporate treasury. The report was based on a global survey of 150 corporate treasurers and 150 CFOs.

The session provided a great opportunity for senior treasury professionals to share their own experiences on the topics covered in the survey. The main points discussed during the session are highlighted below.

Macro risk environment and excess cash

Our survey had found that uncertainty about economic growth was the top macro concern of treasurers worldwide. At the EuroFinance session Mr Glasby noted that in the aftermath of the global financial crisis treasurers primarily had to focus on funding in light of closed capital markets. However, amid ultra-low interest rates the focus had turned to finding ways how to grow, he noted.

Mr Kirkland, by contrast, highlighted that his biggest concern was conversion, not growth, given his company's focus on commodity markets (specifically aluminium in Constellium's case). Regulation was also a big concern in his view. In our survey regulatory and tax risks had come second in terms of biggest macro and financial risks, behind global economic growth.

Meanwhile, Mr Kirkland also noted that the lack of global economic growth provided a good opportunity to think about acquisitions, with treasury's financial expertise a sought-after source of advice. Indeed, in interviews for our report several treasurers had confirmed that their companies were on the lookout for acquisitions, saying that low rates and gushing liquidity meant that there was no shortage of finance for potential deals.

Managing cash in a zero interest-rate environment

Mr Spiegel pointed to companies’ excess cash as a sign that capex was low; our survey had found that the overwhelming majority of respondents still maintained fairly large amounts of excess cash. He noted that geopolitical issues were exacerbating the problem of companies’ underinvestment. Our report had found that geopolitical risk did not feature among the top risks identified by survey respondents; however, recent adverse developments, such as Brexit, were generally seen as having compounded economic downside risks. Mr Glasby added that in challenging economic times such as today's a strong balance sheet was vital.

Mr Kirkland said that minimising excess cash used to be seen as good practice. However, in the wake of the 2008 crash banks became much more reluctant to lend; cash buffers became a form of protection, so that not having enough cash turned into the “absolute sin”, according to Mr Glasby. His company is now almost entirely funded from the capital markets to reduce reliance on bank lending.

As far as banks are concerned, Mr Spiegel highlighted that banks were reengineering their business models and going back to their purpose: facilitating real commerce.

Regulatory challenges

Like our survey respondents, panelists said that they faced a rising and often unnecessary regulatory burden. Almost 80% of our survey respondents had said that they expected the compliance workload to remain as high as it already was or even to increase.

During the session Mr Kirkland mentioned the example of EMIR (European Market Infrastructure Regulation), which was also a source of frustration among many other Europe-based treasures in our survey. Mandatory reporting of exchange-traded derivatives under EMIR entered into force in 2015, and the European Association of Corporate Treasurers (EACT) has repeatedly submitted position papers to the European Securities and Markets Authority (ESMA), the watchdog in charge of implementing and enforcing EMIR, criticising the cost and workload imposed on treasurers by the regulation.

Mr Spiegel said that the intentions behind many regulations were the right ones but that there was a risk of overdoing it. And he also pointed out that banking regulations did not stop at banks. Indeed, interviews conducted for our report had highlighted that many corporate treasurers were concerned about the negative knock-on effects of banking regulations, such as tighter Know Your Customer (KYC) requirements, for treasury operations.

So how does good regulation look like? Mr Kirkland requested that input from all stakeholders was required, not just politicians and banks. Discussions among practitioners were necessary, and treasurers should be in the room when regulations were made. Mr Glasby highlighted the need for a predictable and even playing field.

Technological change

On the subject of technological change in treasury departments our survey had found that treasurers welcomed technological change but did not necessarily embrace it. More than seven in ten respondents (73%) had agreed that the adoption of new technologies was gaining momentum in their company’s treasury department (an even higher share than the 68% in last year’s survey). Most corporate treasurers said that they were happy to drive technological change at their functions, but they also described themselves as risk-averse and usually preferred to wait for technological innovations to mature before adopting them. Panelists confirmed the treasury function’s reluctance to introduce technological change. Mr Glasby highlighted that treasury was generally behind the technology curve. Mr Kirkland confirmed this, saying that IT systems tended to be sticky and dependence on banking systems remained high.

Another key topic—in both the survey and the panel discussion—was cybersecurity. Almost seven in ten survey respondents had said that they were increasingly concerned about external technological risks, such as cyberattacks. Mr Glasby mentioned the example of the CEO email phishing scam as a problem. Hence, there was a growing need to educate employees about cyber risks, according to Mr Spiegel.

For more details on the Managing risk in challenging economic times programme, sponsored by Deutsche Bank, click here.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.