Delicate operations (TT Oct04 p13-15)

The most important risks faced by treasuries are cash and liquidity, funding, interest rate risk and foreign exchange risk, according to a recent survey. Most treasurers are “very cautious” or “cautious” in their approach. The chosen method of measuring risk must suit the level and type of risk. As a minimum treasurers must be aware of the mark to market value of their positions. Only 44% of treasurers currently measure and report on performance against the treasury policy. Most treasurers now rely on a specialist treasury system or the module of an enterprise-wide system. 44% of treasurers believe that IAS 39 will have an impact on their economic treasury policy. The majority expect to shift to more ‘vanilla’ hedging products. IAS 39 will necessitate a detailed review of treasury operations – at the very least.