A recent survey from TD Bank reveals CFOs are more confident about both their organizations' ability to manage financial risk and the financial prospects for their companies.
Nearly two-thirds of respondents reported being more confident in their ability to manage risk, with 25 percent indicating a willingness to take on risk. However, more than a third of respondents indicated that future regulatory change and uncertainty was their main concern moving forward.
The bank surveyed 150 senior executives, half at companies with annual sales of $50 million to less than $250 million (middle-market) and half at companies with annual sales greater than $250 million (corporate).
“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.
Since 2008, many respondents said that their organizations have taken proactive measures to manage risk through internal controls and procedures, increased accountability and evaluation of business relationships.
Forty percent of the respondents said 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 that economic uncertainty (67.5 percent), regulatory changes (66.9 percent) and the increased cost of doing business (66.2 percent) may have on their ability to manage their companies' finances over the coming year.
Middle-market CFOs appear more invested in growth and expansions, with only 30 percent of respondents viewing an increased investment as having a potentially negative impact on their companies' finances.
Corporate CFOs are slightly more conservative. Forty-four percent said they are concerned about the potential negative impact on their business if they are very active in the next 12 months.
Although corporate CFOs are more conservative regarding investment in expansion, they remain confident in their ability to secure credit. Overall, they reported only slight concern regarding cost and availability of credit or risk appetite, indicating that corporate executives are resourced to be more active in 2014 and activity levels will depend more on conditions in Washington, D.C., according to the survey.