CFO risk appetite up amid growth ambitions

The report highlights that the willingness to take financial risks is on the rise, with confidence levels in late December 2009 similar to those seen in early 2008.

Stealing market share from overleveraged competitors and launching new products and services will be high on the list of priorities for many CFOs in the year ahead. Around 46% of respondents say launching new products or services is among their top three aims in 2010, while nearly 40% put expansion into new markets in their top three.

Thirty-three percent want to expand by way of acquisitions, signalling a belief that we may be near the bottom of the market.

Liquidity and cashflow are no longer primary concerns for CFOs, with just 13% of respondents citing this as a concern compared with 55% at the same time last year.

By focusing on controlling cost, cashflow and increasing communication with investors during the financial crisis, FDs have set the foundation for confidence in their ability to manage the challenges and shifting financial landscape in the year ahead.

The main priorities in 2008 and 2009 were maintaining relations with shareholders and banks (80% of CFOs say their companies were successful in this area during 2009), controlling labour costs and managing cashflow. Fifty-one percent now say that increasing cashflow and reducing costs will be paramount.

Areas of weakness in 2009 include managing inventories and supply chains and strategic planning and decision making within the business.

While the survey reveals a strong sense of optimism, there is also some reticence among CFOs who are worried the UK economy is going to experience a weak recovery or even a double-dip recession, with 48% reporting it was their top economic concern for 2010.

Prioritisation of cash and cost control will remain paramount while the potential impact of government policies change – from Chancellor Alistair Darling’s plans to tackle the fiscal deficit, increased taxation and cuts in public spending spooking 14% of respondents to the survey.

In terms of investment, CFOs think commercial real estate was undervalued at the close of 2009, having judged it to be the most overvalued asset in 2007, but thought government bonds and equities were overvalued.

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