Nearly two-thirds of respondents to a recent TD Bank survey reported being more confident in their ability to manage risk, with 25 percent of chief financial officers sharing an increased appetite to take on risks. The enthusiasm is tempered somewhat by the prospect of future regulatory change and uncertainty, with more than a third of respondents naming regulation as their top concern moving forward.
"CFOs feel better equipped to manage risk, which will enable them to take a more active approach to investing and expansion, even if the economy improves at a slower pace than we'd like," said Greg Braca, executive vice president and head of corporate and specialty banking at TD Bank.
Many respondents said that since 2008 their organizations have taken proactive measures to manage risk through internal controls and procedures, increased accountability and evaluation of business relationships. More than a quarter have addressed concerns, primarily by:
* Increasing visibility into the company's cash position (50 percent);
* Increasing and enhancing risk reporting (38 percent); and
* Adopting a more conservative approach to financial risk (37 percent).
Looking beyond their internal risk management practices, executives reported strengthening evaluation of their vendors' and suppliers' risk management practices (44 percent), with 40 percent of the organizations saying they terminated business relationships where the company carried too much risk.
Middle-market executives were more likely than their corporate counterparts to terminate these relationships, and more than 35 percent reported managing vendor relationships as one of their top risk management challenges.
According to the survey senior finance executives say they are most concerned about the potential negative impact economic uncertainty (68 percent), regulatory changes (67 percent) and the increased cost of doing business (66 percent) may have on their ability to manage their companies' finances over the coming year.
Relative to their individual challenges in their roles within their organizations, CFOs said their biggest challenges are their ability to accurately forecast financial risk (53 percent), manage relationships with vendors and suppliers that carry risk (36 percent) and not having enough or accurate data to evaluate risk (29).
The middle-market appears...