Quarter of FTSE 150 treasuries ill-prepared for volatility

A QUARTER of treasury departments among the top 150 companies that trade on the London Stock Exchange are not adequately prepared for financial volatility, research has found.

According to a survey of 95 FTSE 150 companies by Reval, 26% of respondents had no automated treasury management technology system in place, leaving companies unable to handle risks such as liquidity risk, compliance risk, fraud risk, commodity risk and counterparty risk.

“The crisis in the eurozone has been on the UK’s doorstep for the past 18 months, and yet many of Britain’s largest companies still rely on old systems and manual processes to manage risk,” says Nigel Sirett, EMEA managing director of Reval.

Other findings from the study suggest that the lack of adequate preparation is not due to a lack of awareness or concern about risk. Forty-five percent of respondents said that counterparty risk and foreign exchange exposure risk were their top priorities for 2012. Cash management (28%), improved cash flow forecasting (15%) and improved cash visibility (14%) also featured as priorities.

“What we hear from many treasurers is that they know they need to move away from manual processes and implement a more sophisticated treasury and risk management system, but staffing and funding such a large strategic initiative is a challenge in the face of day-to-day activity. This is ironic because the implementation of a TRM system is the very thing that can allow treasurers to move away from tactical process and become a more strategic asset for their organization,” Sirett said.