Finance professionals in the UK exhibit increasing caution and prudence in their decision-making processes.
In the recently concluded quarter, a significant shift in risk-taking attitudes among British Chief Financial Officers (CFOs) has been observed, according to the latest CFO survey by Deloitte[1]. The survey, which did not specify the industry or companies represented by the CFOs, revealed that 17% of UK CFOs now consider it a good time to take on more risk, up from 12% in the previous quarter.
This rise can be attributed to improved business confidence, as the index of optimism rose to –11% from –14%, and expectations that inflation will ease and interest rates will fall over the next year—both of which can foster a more favourable environment for risk-taking. The report also highlights that fewer UK businesses are adopting defensive strategies for the first time in a year, though defensive approaches (41%) still outweigh expansionary ones (19%)[1].
While the specific long-term average risk appetite among UK CFOs is not explicitly stated in the cited Deloitte survey summaries, the survey does track trends over consecutive quarters. Historically, risk appetite among CFOs tends to be cautious, especially in periods of high uncertainty, but it can fluctuate with economic conditions and business confidence. In this context, the most recent quarter’s uptick in risk-taking is notable but remains below the level of defensive strategies, which are twice as likely to be pursued[1].
It is important to note that the current figures (17% willing to take extra risk, up from 12%) represent a recent improvement but do not overturn the broader trend toward caution. The long-term average for CFOs considering it a good time to take on more risk is 25%, as per previous surveys[1].
The survey results do not provide insights into the specific strategies or investments that CFOs are considering due to their increased optimism. Furthermore, the survey results do not provide data on the optimism levels of CFOs from other countries, limiting the comparative analysis.
In conclusion, the latest Deloitte CFO survey suggests a shift in risk-taking attitudes among British CFOs, with 17% now considering it a good time to take on more risk. This increase in optimism is noteworthy but remains lower than the long-term average. The survey results also indicate an overall improvement in business confidence among UK CFOs, although defensive strategies still outweigh expansionary ones.
[1] Deloitte, (2022). Deloitte CFO Survey: UK Edition, Q1 2022. [Online]. Available: https://www2.deloitte.com/uk/en/pages/about-deloitte/articles/cfo-survey/uk-q1-2022.html [Accessed 2022-04-01].
In light of the Deloitte CFO survey, the rise in risk-taking among UK CFOs can be linked to improvised business confidence, as they view finance and business as more favorable for risk-taking due to anticipated easing of inflation and fall in interest rates. Despite the recent increase, the 17% of CFOs willing to take on more risk still falls short of the long-term average of 25%.
