Euler Hermes Survey: CFOs Face Rising Levels of Risk and Uncertainty in 2020

  • 99% of CFOs are at least slightly concerned about risks in 2020, up from 75%
  • Biggest risks: Achieving growth 58%; Cash flow predictability 53.8%
  • 78.8% of CFOs say not getting paid is a concern for their business, up from 66%

Baltimore, February 10, 2020 – 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.