EuroFinance

Balancing risk and growth in a dynamic market

Geert Wouters, head of structured finance & treasury at DEME Group, shared his insights into DEME’s approach to managing risk in a constantly shifting environment. “One of the key challenges we face is the inherent unpredictability of the financial parameters affecting the markets in which we operate,” Wouters noted. “From fluctuating currency rates and interest
rates to volatile commodity prices, the risks are multifaceted and require a proactive and integrated approach.”

To address these challenges, DEME has embraced a multi-layered risk management strategy that includes active hedging policies and a strong focus on maintaining liquidity. Wouters emphasised the importance of a comprehensive understanding of the market dynamics, stating, “Our approach is not just about mitigating risk; it’s about anticipating it. We constantly analyse market trends and economic indicators, which allows us to make informed
decisions that align with our long-term strategic goals.”

DEME’s treasury team employs a mix of traditional and innovative financial instruments to safeguard the company’s assets and ensure financial stability. The company utilises forward contracts to hedge against currency fluctuations, ensuring that project costs remain predictable despite market volatility. “We actively employ a mix of hedging instruments to
manage our exposure to currency fluctuations,” he added. This proactive stance not only protects DEME’s margins but also provides a level of certainty that is crucial for long-term planning and investment decisions.

Innovative financing solutions amid regulatory shifts

The regulatory environment for maritime and offshore operations is another layer of complexity that DEME must navigate. With tightening environmental regulations and evolving standards, financing large-scale projects has become increasingly challenging. Wouters pointed out, “The regulatory landscape is constantly evolving, and this directly impacts how we approach financing. We need to be agile and innovative, leveraging our financial expertise to structure deals that are both compliant and advantageous.”

DEME has adopted a strategic approach to structured finance, combining traditional debt instruments with green financing options that align with the company’s sustainability objectives. This approach not only supports DEME’s commitment to reducing its environmental footprint but also opens up new opportunities for funding in a market that increasingly values sustainable investments.

Wouters elaborated on the importance of aligning financial strategies with regulatory requirements, noting, “Our ability to adapt to regulatory changes quickly and efficiently is a key component of our risk management strategy. We work closely with legal, compliance and sustainability teams to ensure that our financing structures are robust and adaptable to the
changing regulatory environment.”

DEME’s primary objective was to enhance visibility and control over outgoing payments while eliminating the risk of payments to entities on sanctions lists. Prior to the project’s initiation, DEME employees were using over 45 different electronic banking systems to initiate payments locally.

To address this issue, DEME centralised the payments process by replacing the disparate local banking systems with a unified system. The new system was designed to connect to external banks through a single communication channel, specifically Swift, ensuring streamlined and more controlled payment processing and a daily view on the group’s liquidity.

In addition to this, DEME integrated a new central payment sanctions screening system. This system screens all outgoing payments against the most current sanctions lists before they are transmitted to external banks. This measure was introduced to mitigate the risk of inadvertently making payments to sanctioned entities, with great success. It has now been
rolled out across all countries where DEME operates, including complex and highly regulated regions such as Africa, Latin America, the Middle East, and Asia.

Initially, DEME managed over 85 banking partners worldwide and approximately 1,030 bank accounts. To streamline the implementation of the new centralised payment infrastructure, DEME rationalised its number of banking partners and conducted a thorough review of its bank accounts. Non-critical accounts were closed, taking into account the new “payments-
on-behalf” setup to increase control and visibility over the remaining accounts.

The role of technology in treasury transformation

Technology plays a critical role in DEME’s treasury operations, providing the tools needed to enhance efficiency, improve forecasting accuracy, and streamline decision-making processes. The integration of advanced treasury management systems (TMS) allows DEME to monitor cash flows, manage financial risks, and optimise liquidity in real time.

Wouters highlighted the transformative impact of technology, stating, “The digitisation of treasury functions has been a game-changer for us. We can now access data-driven insights that inform our risk management strategies, enabling us to react quickly to market changes. This level of agility is essential in an industry where conditions can shift rapidly.”

The implementation of advanced analytics and automated processes has also freed up valuable time for the treasury team to focus on strategic initiatives. By leveraging technology, DEME can enhance its operational efficiency while maintaining a proactive stance on risk management.

Improving reporting and transparency

Looking ahead, DEME remains committed to building a resilient financial foundation that supports the company’s long-term growth objectives. Wouters emphasised the importance of a forward-looking approach, stating, “Resilience is about more than just weathering the storm; it’s about positioning ourselves to seize opportunities when they arise. Our goal is to
offer a treasury function that not only mitigates risk but also adds value to the business through strategic insight and financial expertise.”

As the global economic landscape continues to evolve, DEME’s treasury team stands ready to navigate the challenges ahead, armed with a deep understanding of financial markets, a commitment to innovation, and a clear vision for the future. Wouters and his team are not just managing risks; they are shaping the financial strategies that will help drive DEME’s success
in the years to come.

The Risk Management & Resilience Award highlights DEME’s commitment to strengthening its financial infrastructure and mitigating risk through strategic measures. By centralising its payment processes and incorporating advanced sanctions screening tools, DEME has set a benchmark for effective risk management in the industry. This recognition reflects the company’s dedication to maintaining robust financial controls and resilience in a complex
global environment.