As the Ukraine crisis worsens, CFOs in all industries have been scrambling for ways to keep up with rapidly-changing sanctions against Russia and assess and manage corporate risk. They also need to ensure that they have increased cyber defenses in the face of increasing cyberattack threats.
The financial fallout continues to gain momentum. Last weekend, the U.S. joined with a coalition of G-7 countries to form the Financial Fallout Coalition.Sanctions for Swift money transfer systemThere were only a few Russian banks that were open during the invasion of Ukraine.
Some companies areAs investors pull back, initial public offerings are being scrapped. As the Russian attacks continue, global companies such as Apple Inc., Shell PLC, and BP PLC have begun to cut ties with Russia. Experts say this is a sign that investors are pulling back. This could lead to Complex accounting judgments, write-downsAccording to The Wall Street Journal
Even finance professionals without direct exposure to the area are on alert and monitoring the situation to adjust the longer-term economic implications of their companies.
Axogen, a biotech firm, stated that its CFO Pete Mariani did not believe the company has any significant supplies linked to Ukraine after it established a team of experts to examine it. He said that Axogen had looked at its supply chain from all angles.
Mariani believes that the level of cyber insurance coverage is adequate. The team is also looking into the company’s cyber insurance policy. Fitch Ratings He stated that the Ukraine conflict will be resolved. Test the effectivenessCyber insurance policies should include language that excludes hostile acts or exclusions war exclusion.
Devastating impact
The war’s consequences are very real for many companies. Global finance companies such as MasterCard have employees and operations in the region. CFOs are already dealing with the direct effects of war and sanctions.,According to CFOs who spoke at the KBW Fintech Payments Conference, this week.
Sachin Mehra (CFO at MasterCard), stated that clearly the invasion in Ukraine is having a devastating affect on everyone. Our number one priority is the people in the region. We spend our entire day making sure they stay safe.
The company is also very focused on humanitarian aid. It just announced that it would make $2 million contributions to institutions working with its partners to help the cause.
Mehra stated that sanctions are a fluid environment and that there is a lot of interaction between authorities to understand the impact of sanctions. Mehra also stated that the company is investing a lot in protecting its network, which is already very strong, from cyber attacks.
American Express’ CFO Jeff Campbell spoke Russia and Ukraine are extremely small for us. It represents a fraction of our global revenues and volumes, which is far lower than 1%.It is still vital because the company has a global network. The company does not have any Ukrainian colleagues. Instead, the company works with partners in Russia, he explained. Russia has a small partner base. One partner issues cards, and a couple of bank partners acquire merchants.
Campbell stated that because of the complex web of sanctions” that regulators all over the world are asking companies to apply, Campbell said that a write-off could be possible in the single digit pennies of an EPS.
Longer-term
We need to ask ourselves what longer-term and larger impacts the global economy could have. Campbell stated. Campbell said that he doesn’t see any inflection point in Russia or Ukraine in the past days when he looked at daily results and travel bookings. But, that is what we will all be watching as time passes.
Even in companies with little or no direct exposure to the wars, CFOs are still considering the long-term economic consequences of these events.
According to John Greene, Discovers’ CFO, there is virtually no impact on its business fundamentals from the conflict. My feeling is that it could boost GDP growth, especially if there is a prolonged conflict and an increase in NATO and U.S. military spending. If that is the case, he stated, a supply-chain impact will trickle down towards everyday consumers and could be accretive in sales and overall growth.
Carmine Pappagallo, CFO at IBrands Global (a private international supply chain platform), stated that although his company does not have any material exposure to Russia, he believes that the company’s freight costs this year will be higher due to rising energy costs.
He said that “the immediate impact that we would anticipate is increased inbound or outbound costs as merchandise is being moved across the U.S. by sea and by land.” We do not anticipate any disruptions in our sales, procurement or revenues.