One peer wisely said in the meeting last May: "Treasurer's job is not to predict but rather to prepare". So very true. I continue having discussions with peers being concerned of the economy. We are having a very complex economic situation presently. Much more complex than in 2008, I believe. This time we do not have a lender of last resort, actually it's the sovereigns themselves on stake. Quite predictable actually but nevertheless it has created another level of complexity. We also see a softening of the demand in many markets.
So what are the most successful treasuries doing to adjust to this level of uncertainty?
1. They do not take a position on what's going to happen
2. They map all scenarios they can think of, even really bad worst cases
3. They stress test the scenarios in the perspectives of risk, financing, cash head room, liquidity etc
4. They adjust their strategies so they can manage all scenarios
5. They communicate to the stakeholders what scenarios they find and what actions they take. This serves two purposes; (i) it calms the stakeholders that treasury is on top of the situation, and (ii) it prepares the stakeholders for what is expected of them
Good Luck out there - be a Business Leader!
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