A corporate treasurer toolkit to ensure fund delivery in disaster zones

Abstract

In a disaster situation, the corporate treasury department of an organisation is also responsible for ensuring business continuity. The treasury department’s key role would be to ensure that vendors, suppliers and employees are adequately remunerated and that operations do not seize due to a lack of working capital. Treasury practitioners concerned with business continuity have traditionally focused on three mainstay aspects of the initiative: (1) creating virtual or remote treasury offices; (2) training key backup staff on emergency procedures; (3) maintaining power and telecommunication connectivity with their cash concentration bank to guarantee treasury is able to transmit funding instructions to them. This paper aims to take business continuity measures for corporate treasury departments to a higher level of preparedness by asking one critical question: ‘What will happen if the cash concentration bank or the entire banking system of a country in which a company has operations collapses?’ Rarely have treasury professionals contemplated such a cataclysmic scenario. This paper aims to (1) validate that banking system failures are common, (2) rationalise why treasury practitioners need to devise contingency funding strategies outside of the banking system and (3) offer some viable alternatives to commercial banks. In this regard the author will draw from the experience of international non-governmental organisations that routinely respond to and operate in cataclysmic emergencies.