Gartner surveyed more than 250 US chief financial officers (CFOs) and senior finance leaders on 13 March to gauge their sentiment on recent bank failures and the instability of the finance sector.
According to the Gartner poll, the recent failures have prompted 39 per cent of CFOs to educate their boards on risk exposures and 38 per cent to assess the risk and viability of current funding sources.
Assessing customer exposure and payment risk (34 per cent) was also high up the list of priorities, followed by assessing third-party supplier risk (30 per cent). More than a quarter of CFOs said they planned to diversify their deposit base across more/new banks (28 per cent), aiming to reduce their concentration risk.
Mitigating current exposure to failed banks (20 per cent) was another important measure for CFOs.
“The data shows that CFOs are clearly concerned about second and third-order effects from this unfolding banking crisis,” said Alexander Bant, chief of research in the Gartner finance practice.
“While the immediate risks may have been stemmed by swift government action, CFOs are rightly assessing potential impacts to their own funding and that of their customers and suppliers.
“About one-third of CFOs are taking immediate action to reduce risk and ensure the viability of financing their organisations. CFOs have a short window to ensure security of their assets, payments, and funding in case things deteriorate further across the banking sector.”
The vast majority (85 per cent) of CFOs polled were concerned about the impact of bank failures on their current operations, while almost one-fifth (18 per cent) had some level of exposure to one of the failing banks.
The survey also found that there is uncertainty among some CFOs around how the crisis will evolve, despite US government assurances that uninsured deposits will remain accessible, and concentration risk has become a new focus for CFOs and their boards.
“This crisis has brought concentration risk into the spotlight, with some companies having upwards of 25 per cent of their cash reserves caught in a failed bank,” said Mr Bant.
“The extent and nature of this crisis is still unclear and despite regulatory assurances, CFOs with concentrated positions at any one institution will prioritise diversifying their deposits as matter of urgency.”
