Craig Jeffery (Moderator), Managing Partner, Strategic Treasurer
Rajat Gupta, Vice President, Strategy & Digital Innovation – Enterprise Services, Genpact
Russell Hoffman, Director – Market & Treasury Risk, KPMG
Yang Xu, Senior Vice President, Global Finance and Treasurer, Kraft Heinz
Question 1: What are the risks that were observed with the onset of COVID-19?
- There are two categories of risks:
- External facing risks such as demand risk
- Internal facing risks such as business operations continuity
- Risks had to be solved differently for different business segments in the same company. Moreover, there were business losses, but the customer demand was high, so inventory had to be managed accordingly.
- An example of business risks involves a liquidity mismatch for a regulated industry in multiple business segments.
- The operational risks had to be identified, and protecting the employees became a top priority.
- A cross-border supply chain is one such organization that was the worst hit due to covid.
- Strategic transition and transformation needed to be taken into consideration for e-commerce.
- There was increased volatility in FX and commodity areas. They had to look for risk assessment and scenario planning on liquidity pockets (working capital, assets).
- Treasury functions became more strategic and creative for sourcing cash.
- Operational strategies were involved in mitigating risks in treasury
- Transformation plan and business plan were used to make the treasury environment seamless.
Question 2: How to leverage data to manage risk effectively?
To make faster decisions, quality and timely data are now more critical than ever. Here are some examples of how data can help manage risk effectively:
- Detailed analysis and reporting
- Collaboration with key stakeholders within the organization
- Quality and timely data
- Using relevant digital tools
- Making a shift to real-time payments
- Use data-led intelligence for both risk mitigation and real-time decision-making.
- Use deep data and customer segmentation to gain a detailed understanding of collections and overdue payments to boost the DSO.
- Use deep data, product segmentation, and supply segmentation to manage the DPO.
- Scenario analysis is helpful to assess liquidity.
- Use regulations of digital payments across geographies.
Question 3: How did your team monitor risks?
- Look at big-ticket numbers/accounts for cash flow.
- Embrace power management.
- Have clear visibility into liquidity daily.
- Keep in touch with both internal and external through digital communication.
- Look at risk perimeters and derivatives (volatility of commodities).
- Keep an eye on the balance sheet and cash flow proactively.
- Have a holistic view of how different risks interplay in the business units and monitor those risks proactively.
- Enhance visibility through reporting and communication.
Question 4: What has stabilized, and what will continue in the volatile environment?
The pole runs from recovery on one end to reinvention, so most businesses are in the middle of the pole, trying to recover in some areas while reinventing to the new normal in others. While the pandemic’s unpredictability persists, we can see that a few things are beginning to stabilize, such as:
- Demand prediction
- Ability to operate in a virtual environment
The following has changed, will continue to stay, and will not be reversed:
- Ability to re-pivot and re-plan your strategy
- Acceleration of digital data transformation of a business
- Driving change through digital transformation and automation will continue in the future.
- Companies are now getting back on track and getting back on initiatives put on hold during the pandemic.
Question 5: How has the role of the treasury evolved?
- Increased focus on investing in insurance and liabilities
- Digital transformation in treasury
- Increase priority on the management of debt and cash
- Increased need for managing a solid balance sheet for long term success
- Making cash a business agenda rather than a finance agenda
- Reduced treasury cycle time, which is strategic for stakeholders
- The ability to quickly measure critical measurements
- More communication of treasury in and across finance