Articles

The War in Ukraine: American Companies Discuss the Impact and Their Responses

  • By AFP Staff
  • Published: 5/13/2022
The War in Ukraine American Companies Discuss the Impact and Their Responses _Header

AFP recently met with a group of treasury professionals from the U.S. to discuss the war in Ukraine and how their organizations are responding to and dealing with the challenges stemming from the conflict. The group was made up of professionals from organizations around the United States, including corporates, government organizations and nonprofits. 

Companies weigh in on their responses — and the impacts 

When asked how their company and treasury department is responding to the war in Ukraine, one professional said they’ve temporarily suspended operations in Ukraine, Russia and Belarus and are working with staff in Ukraine to help them get the women and children out. They said this is different from anything the company has experienced before, so how it plays out, given all the unknowns, is fluid.  

Another professional said that while they don’t have a physical retail or operational presence in the area, no more of its products are being shipped to Russia.  

Payroll was the biggest challenge named by another professional. She said her company had hundreds of associates in Europe and Russia who needed to be paid, so they started this balancing act of keeping just enough money in area banks. Using an in-country, third-party provider, the company has been able to maintain the bare minimum. She said making sure their associates have the means to get out, that they have emergency money for transportation, etc., is the company’s priority, and it is making that happen.  

What about companies that franchise? The company itself can’t shut down the franchises, only the owners can, but in this case, it has ceased all development initiatives in Russia.  

And, if you have rubles, you’re out of luck. One practitioner in the banking industry said they’re not making payments in or out of Russia and have basically turned off the ruble. They said their biggest challenge, however, has been keeping their payment system up to date with the sanctions in real time, because overnight isn’t fast enough. 

Risk management is top of mind for many 

Several practitioners said they are also keeping a close eye on the China-Taiwan situation so they know what they have, where they have it, and can take action — if needed.  The other thing companies need to worry about, particularly if it’s a remote operation, is an increased incidence of cybercrime. There has been a lot of more cyber activity, according to one practitioner.  

Another practitioner’s company has a crisis management team that meets two to three times a week, made up of people across the company, including their chief security officer, to talk about the current state of things, and to go through each of the groups and discuss any changes and future impacts down the road. They assembled a short time before the invasion of Ukraine, and their function is primarily to keep everyone up to date on what's going on.  

They said cyber insurance is getting harder and harder to get, and when you are able to get a policy, it’s incredibly expensive. Plus, you’re not always sure if you’re getting the coverage you want. Their advice is for companies to think about investing in infrastructure rather than insurance — a proactive rather than reactive approach.  

According to another practitioner, the big debate is over whether a policy covers “kinetic activity,” i.e., war, invasion. He said that’s usually a trigger to invalidate the coverage.  

Who is the best source of information in this regard? These practitioners said brokers are one source, along with in-house security, both IT and global, who know more about what’s happening on the ground and have the resources to get you that information. 

Keep up with all the latest in treasury news, as well as the impact of the war in Ukraine, by subscribing to AFP’s newsletter, Inside Treasury, and get Treasury & Finance Week with your AFP membership

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