Euler Hermes Survey: CFOs Face Rising Levels Of Risk And Uncertainty In 2020

BALTIMORE, Feb. 10, 2020 /PRNewswire/ -- Ninety-nine percent of CFOs are at least slightly concerned with the risks and uncertainties facing their companies in the next 12 months (up from 75% heading into 2019) with more than 50% citing high or moderate levels of concern, according to a national survey released today by Euler Hermes Americas, the world's largest trade credit insurer. The second annual Euler Hermes "Risky Business" Survey analyzed responses from U.S. CFOs and their direct reports in companies with at least $5 million of annual revenues to understand their top concerns about geopolitical tension, economic uncertainty, and other risks of doing business heading into 2020.

CFOs report facing uncertainty – in fact, the Euler Hermes survey found achieving growth, changes in the regulatory environment and cashflow predictability were the top three concerns for CFOs in 2019. Over 50% of those surveyed said that cashflow predictability was a key concern (up from 34% last year) with more than one-third (40%) of CFOs saying they have become more concerned about their overall risk in the last 12 months.

"Businesses today are faced with higher levels of volatility, unpredictable global markets, new forms of competition, and digital transformation at unprecedented pace," said James Daly, President and CEO of Euler Hermes Americas. "With all of the potential risks business leaders are facing, having the right risk protections, partners and tools in play is an important first step."

Risky Business

From cyber threats to trade wars, business leaders are facing headline grabbing risks every day, but behind the scenes, risks like cash flow predictability and nonpayment events are keeping CFOs awake at night. Nonpayment events often aggravate cash flow predictability concerns, and they are appearing to be becoming more frequent. In fact, 79% of CFOs are concerned about not getting paid (up from 66% in 2018), experiencing an average of 19.1 nonpayment events over the last three years (up from 17.2 in 2018).

Nonpayments do more than disrupt cashflow. More than four in five (80%) CFOs have experienced a loss of business from stricter payment terms, smaller credit limits and deposit requirements, up significantly from 57% in 2018. 81% have unrealized revenue from stricter payment terms, with businesses losing an average of over $1 million in revenue because of their risk posture.

Concerns over nonpayment events weaken a business's overall risk tolerance. According to the Euler Hermes Survey, CFOs who are more concerned about nonpayment events also tended to be more worried about risk overall in the next 12 months.

Tariffs, Elections, Recession, Oh My

Compounding the regular risks of doing business are concerns about stability in 2020. 92.2% of CFOs are at least slightly concerned about a recession. Trade wars and tariffs were also on the minds of CFOs, with 93% saying a continued breakdown of trade relations would impact their business and two-thirds reporting that the Trump administration's tariffs would at least moderately impact their business. CFOs also cited economic and trade policy as their top concerns going into the 2020 election.

"It's clear that a weak risk posture exasperates the impact of risks like these," said Daly. "At Euler Hermes, we prepare our customers for every scenario via a thorough knowledge that will both mitigate risk and stimulate growth, even in times of uncertainty."

For more information on risk tools that help business leaders to focus on growth, visit  https://www.eulerhermes.com/en_US.

Methodology

The Euler Hermes survey analyzed responses from 250 U.S. CFOs and their direct reports. Quotas were established to ensure that half of the respondents were from small companies (revenues between $5M and $25M) and that the remainder were "medium sized" (with revenues of $25M or more). Survey responses were collected during the period of October 30 – November 14, 2019. Where possible, the results for this 2019 survey have been compared to the findings from the 2018 study.

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About Euler Hermes

Euler Hermes is the global leader in trade credit insurance and a recognized specialist in the areas of surety, collections, structured trade credit and political risk. Our proprietary intelligence network analyses daily changes in corporate solvency representing 92 percent of global GDP. We give companies the confidence to trade, and be paid. We compensate your company in the event of a bad debt, but more importantly, we help you avoid bad debt in the first place. Whenever we provide trade credit insurance or other finance solutions, our priority is predictive protection. But, when the unexpected arrives, our AA credit rating means we have the resources, backed by Allianz to provide compensation to maintain your business. Headquartered in Paris, Euler Hermes is present in 52 countries with 6,050 employees. In 2018, our consolidated turnover was €2.7 billion and insured global business transactions represented €962 billion in exposure. Euler Hermes' Americas' regional headquarters for the United States, Canada and Brazil is located in Owings Mills, Md. Founded in 1893, Euler Hermes North America is the world's largest and longest-established provider of trade credit insurance and accounts receivable management solutions. The company protects and insures around $250 billion of regional trade transactions annually, serving small, medium and multinational clients across a range of sectors. The company employs 430 people regionally and serves clients from more than 50 locations in North America and Brazil. 

Cautionary note regarding forward-looking statements: The statements contained herein may include prospects, statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such forward-looking statements. Such deviations may arise due to, without limitation, (i) changes of the general economic conditions and competitive situation, particularly in the Allianz Group's core business and core markets, (ii) performance of financial markets (particularly market volatility, liquidity and credit events), (iii) frequency and severity of insured loss events, including from natural catastrophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates including the euro/US-dollar exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisitions, including related integration issues, and reorganization measures, and (xi) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences.

SOURCE Euler Hermes Americas

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