The decision has been made and the ‘die is cast’. Whatever camp you were in last night we all have to deal with the consequences of the UK vote to leave Europe today. So what should CFOs be doing this morning?
These are monumental events but I don’t think we should be too distracted by the first day of trading post-Brexit. The markets are gyrating mainly as dealers and investors unwind or take positions to take advantage of the volatility and short term over/under-valuations.
I consider that CFOs should be helping their board colleagues to do three things: (i) a risk assessment. Looking at currency, inflation, interest rate, country, employment and supply chain risk etc, depending on the character of the business. (ii) Scenario modelling looking at best/worst and median case probabilities (iii) talking to major customers, suppliers and other stakeholders to gauge their reaction.
As for geo-political risk (eg will other countries leave) we have to wait and see. This is a profound change and there is no template.
This is one example of where ‘grey hairs’ help. Experience will trump analysis (because we have no data – nobody knows for sure). But whereas the newspapers will look for the next dramatic headline I believe most CFOs and their businesses should stay calm.