06-10-2023 11:11

Treasurers return to the role of risk manager

“Brave new world” is the title of Nordea’s 2023 Treasury Survey, reflecting a new paradigm of inflation, higher interest rates and geopolitical risks. How are treasurers responding to the changed risk landscape?
Kayaker in the rapids

Treasury and finance professionals are working in a challenging new era of stubborn inflation, higher interest rates and elevated geopolitical tension. They acknowledge the risks that come with this new reality, but there does not seem to have been widespread action on that awareness yet. 

That’s according to the latest findings from Nordea’s 2023 Treasury Survey: Brave new world. 

“We see a clear pattern that treasurers perceive the need to be more mindful of interest rate risk and leverage, but they haven’t done that much yet in terms of taking action,” says Johan Trocmé, Head of Nordea Thematics and co-author of the study.

Each year, the survey takes the temperature of Nordic treasury professionals on a wide range of issues. This year’s study drew in record participation from 176 Nordic and international large corporates from a broad spectrum of industries. The authors set out to examine whether the new, uncertain environment with higher interest rates and geopolitical risk is reshaping treasury priorities and behaviour. 

“The inflation comeback has led to higher interest rates. No one knows how far it will go or how long it will last. We also have the geopolitical risk from the war in Ukraine and simmering tensions between the US and China,” says Trocmé. 

He goes on to explain that more than 10 years ago, the treasury function was more oriented towards managing financial risks. Then, over the past decade or so, it entered a period of optimisation, centred around streamlining processes, boosting efficiency and turning the treasury into a well-oiled machine. Now, with the new economic environment, has the treasury reprised its role as risk manager?


We see a clear pattern that treasurers perceive the need to be more mindful of interest rate risk and leverage, but they haven’t done that much yet in terms of taking action.

Johan Trocmé, Head of Nordea Thematics

New world, new risk appetite? 

When it comes to changes in their finance policies, treasuries do seem to be refocusing on risks. Around 20% of companies have changed their policies in the last year, a share on par with that in our 2021 post-COVID survey. Back in 2021, the changes focused heavily on liquidity, with little attention to interest rate risk and leverage. 

Now in 2023, there’s significantly more focus on ESG, with 34% reporting increased focus on that area in their policies. 

“We see a clear trend of companies formalising their commitment to sustainability in their finance policies,” says Trocmé.

Liquidity is also still a top focus, along with a shift to longer debt maturity and more interest rate hedging. 

“Interest rate risk has been something of a non-issue for the past 10 years or so, and now it’s back. Companies have felt a need to change their finance policies to reflect that,” says Trocmé.

How finance policies have changed in 2023

Areas where companies have made changes and in which direction

We see a clear trend of companies formalising their commitment to sustainability in their finance policies.

Johan Trocmé, Head of Nordea Thematics

While companies seem to acknowledge the new environment, with changes to debt maturity and interest rate hedging in their policies, they have yet to widely put that into action. Respondents’ fixed interest share of debt is down from 2022, which surprised the authors. The study also found no major change to debt maturity, with the average in the 30-36 month range. Only one in four respondents has reduced its leverage or is considering doing so.

Fixed interest rate share of debt down from 2022

When it comes to credit ratings, 38% of companies have at least one, most often among the larger corporates, and 12% say they’re considering obtaining one. Treasurers also do not seem to perceive the coming implementation of Basel IV banking regulations as a major issue, despite the rules’ potential to affect corporates’ access to bank financing.

How will bank groups change in the future?

The study also looked at how large corporates expect the size and composition of their bank groups to change in the future. While 71% of companies have 1-6 banks in their bank groups, they expect the number to rise slightly in the future, particularly in Europe. 

Top reasons given for the changes include:

  • Geographical changes and concentration of ancillary business
  • A focus on selecting stronger banks
  • The shift from bond to bank funding

A look at treasury resources

Treasurers list headcount as one of the biggest obstacles to improving efficiency and productivity. Around 39% have increased staff in the past three years, and 35% expect to grow their headcount in the next three years. The growth reflects the continued need for human treasury resources, even with the strong focus on efficiency and optimisation, and especially now with the heightened need for risk management, according to Trocmé. Some treasuries may consider themselves a bit "rusty" in risk management competencies, and need to brush up on skills or add staff.

Changes to treasury headcount

Treasurers have also become increasingly confident in their treasury management systems (TMS), with a greater share saying their TMS is future-proof compared to prior years’ surveys.

“We’ve seen a high pace of upgrading and replacing TMSs, which has been above and beyond ongoing efficiency and digitalisation projects, and contributed to the need for more staff in the past few years,” says Trocmé.

The treasury’s mission

When it comes to what treasuries are responsible for, the usual suspects top the list: cash management, funding, FX risk management and interest rate risk management. The survey also found an increasing focus on ESG for both business and treasury. 

ESG focus on the rise for both business and treasury

What are treasurers spending most of their time on? Liquidity, funding and providing advice to company management come out on top. 

Time spent by treasury in different areas

They would like to spend even more time on advising the business and management as well as automation, digitalisation and efficiency improvement and FX risk management. 

What treasuries wish to spend time on vs actual time spent

They list cash and liquidity management; cash flow forecasting; compliance – KYC (know your customer) and FX risk management as the top four areas with the greatest inefficiencies and potential for improving productivity.

Areas with the greatest efficiency improvement potential

Yet for Trocmé, the biggest takeaway from this year’s survey, is companies’ level of risk tolerance when it comes to the challenging new economic environment. 

“That contrasts with the urgency we see for managing these risks,” he says. “I look forward to our upcoming conversations with clients to better understand why.” 

Explore more publications from Nordea Thematics

The Nordea Thematics team also produces research for large corporate and institutional customers via the report Nordea On Your Mind.

The research does not contain investment advice and typically covers topics of a strategic and long-term nature, which can affect corporate financial performance.

The themes vary widely, and many are selected from suggestions by customers. Examples include artificial intelligence, wage inflation, M&A, e-commerce, income inequality, ESG, cybersecurity and corporate leverage.

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