CFO perceptions of external financial and economic uncertainty have seen the sharpest rise in five years, said Deloitte.It explained that moves in financial markets and risk appetite among CFOs are closely correlated: “Both react to similar factors and financial markets directly influence corporates, for instance through the availability and pricing of capital. Equities sold off in the third quarter, with emerging markets seeing the largest outflow of capital since the financial crisis. With UK equities down 18 per cent in the last three months there has been a parallel loss of risk appetite among UK firms.” Furthermore, the third quarter saw a rise in investor risk aversion as they moved away from riskier assets and into safer government bonds. This has also fed through to a fall in risk appetite among CFOs. The proportion of CFOs who think now is a good time to take risk has dropped to 46 per cent, down from 59 per cent in the second quarter and 72 per cent in 2014. An uptick in risk aversion is feeding into a more defensive stance on the part of major corporates, with a greater focus on cost reduction and rather less on investment. Levels of optimism among CFOs have also decreased with 29 per cent now less upbeat about their company’s financial prospects than they were three months ago. Read more about business risk:
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