A year of difference. At the start of 2022, treasurers ranked tightening labor markets as their companies’ top risk for the new year. Twelve months later, the war in Ukraine, rising inflation and a hawkish Fed changed the outlook dramatically. The preliminary results of NeuGroup’s 2023 Finance & Treasury Agenda Survey point to the challenges ahead:
- Going into 2023, treasurers cited a prolonged economic slowdown as their biggest concern. For treasurers, lower sales put higher pressure on working capital. Not surprisingly, treasurers selected providing liquidity to the business as their top objective for the year ahead.
- The recession risk will persist through the end of 2023 or even beyond. Fifty-nine percent of treasurers predicted negative GDP growth will last through 2023, and 21% expect it to extend into 2024.
- Worries about the labor market dropped to the No. 6 slot. Some of the country’s largest companies have already announced layoffs. Unfortunately, this risk perception also impacted treasury’s 2023 objectives, with talent development dropping to the bottom of the list.
- While political and regulatory uncertainty ranked second in the list of risks, financial market volatility got more votes in the top-risk category, a testimony to the level of uncertainty about FX and interest rates and share prices. Last year, market volatility was the No. 5 risk.
- The good news is that treasurers are not concerned about accessing external funding if needed. Very few cited constrained access to the debt markets as a significant risk.
By the numbers. The chart above represents the ranking of eight risk factors based on responses to NeuGroup’s 2023 Finance & Treasury Agenda Survey. The total score is captured by the length of each bar. The shading reflects the frequency by which the risk was selected on a weighted score basis. The darker the shade, the bigger the risk.