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More risk for the same reward means CFOs are playing it safe

Kim Hayward
canary wharf 300x225 More risk for the same reward means CFOs are playing it safe

(GETTY IMAGES)

The findings of this year’s BDO Ambition Survey released today are a clear reflection of the impact of the economic and political uncertainty on businesses and investors across the globe. Now in its third year, the Ambition Survey examines the views of CFOs of mid-sized companies as they continue to pursue investment opportunities overseas.

This year the findings demonstrate that the risk-reward dynamic is changing as CFOs face a tough dilemma. CFOs now tell us they face greater risk for the same reward and as a result are pursuing a ‘better the devil you know’ approach to investing. In 2011 red tape and bureaucracy topped the list of CFO concerns but in 2012 the focus is set firmly on the threats presented by currency fluctuations and geopolitical risk. And it’s causing CFOs to adopt a more risk-averse approach.

This year, 66 per cent of the CFOs we questioned are setting their sights on a ‘big seven’ of attractive investment destinations:  these ‘safe haven’ markets include not only the more established markets of the US, UK and Germany, but also Brazil, Russia, India and China (BRIC).

The BRIC countries are inspiring more investment confidence and are seeing a boom in investment, with nearly half of the CFOs interviewed investing in, or planning to enter these markets, compared to less than a third in 2011. Meanwhile, there appears to be no light at the end of the tunnel for Southern Europe. Traditionally a safe investment, CFOs now see parts of Europe as risky as the politically unstable countries of the Middle East.

China and the USA once again top the BDO Global Market Opportunity Index. As a result of this flight to safety, other traditionally established markets, including France and Japan, have also suffered significant falls in the Index. France drops from the seventh most attractive country for investment to thirteenth, while Japan comes in at twenty-seventh; it was previously ranked seventeenth.

In 2012, CFOs all over the world are finding it more difficult to conduct business abroad – certainly compared to three years ago. They cite the poor economic situation, increased regulation and greater competition as the main reasons for this. Furthermore, approaching new markets with more caution means that the need for good local staff has come to the fore. Almost half of the CFOs we spoke to said the need to secure good advice from reliable people on the ground as a major insight for successful international expansion.

And this is where BDO comes in, our 1,100+ offices in 138 countries worldwide have the local knowledge and expertise to help our clients respond to these challenges. When CFOs were asked who their most trusted sources of advice were when expanding into new territories overseas, accountants and tax advisers topped their list.

An important feature of delivering exceptional client service is strong local knowledge and on-the-ground connections backed up by global standards – how advisers implement this is crucial. Our survey showed that CFOs overwhelmingly see customer services as key to international success. Whether you are planning to take your first steps towards international expansion or are a seasoned investor, you should find the results of the BDO Ambition Survey 2012 interesting and the experience of your peers useful.

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