Chapter Thirty Two

Managing Treasury in Uncertain Times

THIS CHAPTER, A LATER ADDITION to the Handbook, comes in response to requests from readers who visited the book’s website (www.wiley.com/go/treasuryhandbook) as the book progressed and from participants in my training programmes and clients whom I advised during the periods of uncertainty following the events of 2008. No comprehensive checklist can cover every single element that needs to be looked at and no prescription solves all uncertainties.

Rather, this chapter, and the checklist in the Toolkit on the Web site, contains simple guidelines based on common sense and experience that will guide Treasury teams through various bouts of uncertainty.

UNCERTAINTY AND ITS IMPACT ON TREASURY MANAGEMENT

Uncertainties in the Treasurer’s world can exist in many forms, can be created by various factors, and can have varying consequences—and sometimes none at all. A typical sequence of events is given in Figure 32.1.

FIGURE 32.1 Uncertainty and Sequence of Events

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An uncertainty can be defined loosely as a condition in the market or environment that increases the unpredictability of market and environment behavior, usually based around a series of events that could be political, economic, financial, or natural. Specifically for the firm, a trigger event or set of events cause a certain change in the market and environment that could ...

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