Alexey Kornya, CFO of Mobile TeleSystems: Global risk perception is skewed
"Russia's dependence on natural resources is not much different than Western economies' dependence on their ability to print money," says the CFO of one of Russia's largest telecoms operators during the CFO Summit Emerging Europe & CIS. More generally, he says, international investors and rating agencies grossly overestimate the risks in emerging markets. The CFO admits that soft factors such as political risks should not be neglected, but argues that economic fundamentals of companies and governments alike would justify much better risk assessments. And with low leverage in households and governments, he still sees a lot of growth potential in emerging markets.
Ronald van Hees, CFO of Dutch health care provider CZ, on risk and return.
Ronald van Hees, CFO of Dutch health insurance provider CZ, has around €2 billion in liquid assets to invest – an increasingly difficult challenge. With risk being his overriding concern, he is even willing to accept negative yields, he tells CFO Insight TV.
Allan Russell, SAS Institute, on how to manage risk and make use of big data
“Executives today understand the risk their businesses are exposed to somewhat better than they did 20 years ago,” says Allan Russell of SAS Institute, “but they still need to understand it a lot better.” All too often, CFOs and CEOs are unaware of risks that are hidden in unfamiliar parts of an organisation or that are simply inherent in certain processes. At the same time, managers fail to make use of the huge amount of data their companies gather every day. Executives need to learn how to use business intelligence solutions to better understand the risks in their business, and to exploit the full potential of large data sets, commonly referred to as big data. Allan Russell has been working on these issues for more than 30 years and gives some first-hand insights into the latest developments on risk management and the proper use of big data.
A Period of De-Globalisation
In our second session with Professor Harold James of Princeton University, CFO Insight-TV discusses implications the current crisis has on globalisation in the wider perspective. “I think we see some clear signs of a de-globalisation framework,” Professor James says. For example, the debates in Europe are typically antagonistic. Southern European countries think the north is suffocating them with calls for austerity, and northern European countries feel that those in the south are exploiting their generosity.
Armand Angeli, IAFEI Europe President, on the globally evolving CFO role
The role of the chief financial officers has spread around the globe. But Armand Angeli, Europe President of the global CFO association IAFEI, points to differences in how the role is lived around the globe. Starting in Central and Eastern Europe and then looking to China, Angeli takes a broad look around.
CFO expert Clifford: Communication is key for both cash-rich and cash-poor CFOs
Scarce bank lending coupled with strong corporate earnings and flush bond markets have created a bipolar world for CFOs: they either face a bitter liquidity crunch or huge cash piles building up on their balance sheets. Speaking on CFO Insight TV, Les Clifford, a partner at professional services firm Ernst & Young and a leader of their CFO programme, discusses their new report looking at how CFOs on both sides of the divide can cope with the challenge.
For chief financial officers at cash-strapped companies, raising liquidity is a daily challenge. This requires open communication with the lenders, Clifford says. “What you want to avoid is crisis management. Oftentimes many people try to believe that around the corner it’s going to be resolved, there’s going to be cash.” Instead of open discussions about long-term solutions with their lenders, they opt for short-termism.
However, this can be a dangerous approach, Clifford warns. “Most lenders are good at looking at the market and making their own views of these companies already,” he says. “So coming together to discuss each other’s perception can break down walls. ... Make [the lenders] a partner more than purely a lender.
Chief financial officers at cash-rich companies seem to face the easier task. However, they too must ensure that their message is being understood, Clifford says. “The question is: Are CFOs communicating their decision clearly enough to investors?” Many finance chiefs may not do all they can in this respect, leaving them vulnerable to investor backlash.
Haluk Dortluoglu, CFO at BIM, on growth in Turkey and abroad
Fuelled by Turkey's unprecedented economic growth, Turkish hard discounter BIM has seen spectacular growth rates over the past several years. Looking ahead, CFO Haluk Dortluoglu talks about the potential of international expansion and political risks in Egypt in the wake of the Arab spring.