CFOs open to risky business in 2014, finds survey

Jan 09, 2014
<p>More than half say now is a good time to take on risk</p>

UK CFOs may have made a New Year’s resolution to make braver decisions, as a Deloitte study finds a record 57 percent of the country’s chief financial officers think 2014 is ‘a good time to take on risk’.

As part of Deloitte’s Q4 2013 CFO survey, executives were asked to rate how optimistic they feel about the coming financial year. The study reveals that existing C-suite concerns appear to be dropping away, with those surrounding financial or economic uncertainty dropping to their lowest level in three years.

On average, CFOs imagine there is a 16 percent chance of the UK falling back into recession in the next two years, down from a 40 percent chance last quarter. Similarly, most are optimistic about financing their business, with a record 80 percent saying bank credit offers are an attractive source of capital for their organizations.

Risk appetite, Deloitte
Source: Deloitte CFO Survey Q4 2013

‘What we’re seeing for 2014 is a really distinct shift toward expansion,’ says Ian Stewart, chief economist at Deloitte. ‘Two of the big barriers to growth in recent years have been credit shortages and uncertainty, and both of these factors have improved appreciably in the latest survey.’

As a result, Deloitte reports that CFOs’ chief concern going into 2014 is expansion: 88 percent of those polled expect M&A activity to increase in the next 12 months, matching levels last seen in early 2011 when the UK looked set for a sustained recovery.

‘CFOs see fewer economic risks out there, they’re much more confident the economy will steer clear of recession, and they’re much more confident than they were a year ago that the single currency will hold together,’ Stewart explains.

Within their plans for growth, 40 percent of CFOs rate expansion into new products, services or markets as their top priority, a similar number to that reported in Deloitte’s survey from Q3 2014. Increasing cash flow, reducing costs and increased capital expenditure all remain corporate priorities for most.

The survey, launched in 2007, questions CFOs and group finance directors from a number of UK companies. This year, Deloitte gauged opinions from 122 UK CFOs, including 32 at FTSE 100 companies.

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