Trésorier/Treasurer magazine - N°94 - Juil/Août/Sept 2016 - (Page 46)
MANAGE ENTERPRISEWIDE FX RISK
AS THEY GROW
As mid-market companies start seeking revenues outside their
domestic markets, they are increasingly exposed to FX risk.
Treasurers are challenged to set up a risk framework and find
tools to help them control currency volatility.
LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE
- JUL /
AUG / SEP 2016
In a recent Reval survey, 37% of about 150 finance professionals working in companies with less than USD 1 billion
in revenue said their treasury teams will become more
international over the next three years. As mid-market
companies start operating in foreign markets, they will
become increasingly exposed to FX volatility. This is particularly challenging in emerging markets, where currency
pairs tend to swing even higher.
As the turmoil in FX markets continues, corporate treasuries in the world´s largest companies review their risk
guidelines and adapt their hedge accounting programs.
However, the treasuries of most mid-market companies
don´t even have a risk framework. The financial professionals of these companies are tasked to define risk strategies
and guidelines from scratch.
Risk Framework: Sync and Standardize
For treasurers in mid-market companies, building a risk
framework is a stretch because their organizations often
cannot dedicate a full-time person as risk manager. But
as many risk-related activities fall within treasury's core
mandate, treasurers are best suited to drive professionalism in exposure management.
Typically, finance experts already manage risks such as liquidity and capital risk, foreign exchange and interest rate
exposure, compliance risk, operational risk, cyber risk
and counterparty risk on a regular basis. Depending on the
company, treasury's responsibilities can also expand into
less traditional risk areas, such as commodity risk.
As FX risk management in particular becomes more
important in growing companies, it becomes necessary to
implement structures and define guidelines for an enterprise risk framework. Typically, a solid control framework
covers the following areas:
* Risk factors: Which risk factors have to be considered
by each business unit, and on an enterprise level?
* Risk processes: How should risk be valuated
* Risk reporting: How and how often should exposures
be analyzed and reported?
Table of Contents for the Digital Edition of Trésorier/Treasurer magazine - N°94 - Juil/Août/Sept 2016
Table of contents
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW Philippe Gelis - Kantox - Fintech and the future of banks
Lost in transformation
Everything has a price – a transfer price
Treasury Survey - an unprecedented picture of treasury activities in Luxembourg
The impact of negative rates on Treasury and Risks Management Systems
Towards reporting harmonisation?
Understanding the Treasury impact of BEPS
Impacts of Single Resolution Mechanism and Bail-in for European Banks
Supply chain? Not concerned?
Collateral management and the Corporate Treasury function.
Efficiently Managing Cross-Border Payments in Turbulent Times
How Mid-Market Companies Can Efficiently Manage Enterprise-wide FX Risk as they Grow
Investing surplus cash in repos
A wind of technology changes in the treasury management world
Invoicing can be fun….?
Comment améliorer la performance des fonds de pension européens
15 MINUTES WITH O2Finance
THE FINANCIAL RISK OBSERVATORY
LIFE BEYOND NUMBERS
Trésorier/Treasurer magazine - N°94 - Juil/Août/Sept 2016