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Kyriba currency risk management webinar slides 3.17.16 ss

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Is your team aware of, and successfully managing the elements that impact currency risk today?

This webinar highlights the factors impacting global currency risk, and provide best practices that can assist your organization into achieving visibility into your currency risks.

View this deck to see what steps you can take to improve global visibility.

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Kyriba currency risk management webinar slides 3.17.16 ss

  1. 1. Currency Risk Management March 17th, 2016
  2. 2. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2 Today’s Presenters Ian Argue, CFA Managing Partner, Global Treasury Partners ian.argue@globaltreasurypartners.com Thomas Gavaghan Treasury Advisor, Kyriba tgavaghan@kyriba.com
  3. 3. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3  Today’s Factors Impacting Currency Risk  Leveraging Technology for Managing Currency Risk  Best Practices for Managing Currency Risk Agenda
  4. 4. Today’s Factors Impacting Currency Risk
  5. 5. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5 Factors Impacting Currency Risk FX Economic Geopolitical Market
  6. 6. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 6 Impact of Currency Risk 1. Pricing / Tender 2. Order 3. Production 4. Shipping 5. Invoice 6. Cash Forecast Exposure Committed Exposure Accounting Exposure Revenue COGS Gross Margin Expenses Operating Income Other Income/Expense Net Income Balance Sheet Assets Liabilities Equity Exposure TypeBusiness Process Impact
  7. 7. Leveraging Technology for Managing Currency Risk
  8. 8. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 8 TMS Risk Management Benefits Mitigate Market Risk • Indentify currency and interest rate exposures • Manage hedging policies and execute hedging transactions • Perform periodic mark-to-market valuation and market sensitivity analysis Ensure Counterparty Compliance • Comprehensive limit reporting engine to manage specific Board of Director mandated compliance policies • Mitigate Counterparty, Credit Rating and Sovereign risks Manage Global Liquidity Risk • Complete cash visibility • Reduce local balances via target balancing and intercompany loans / IHB • Reduce fraud at corporate and regional finance level
  9. 9. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 9 Transaction Processing in TMS Visibility Pricing Trade Capture MTM Limits Market & Credit Risk Scenario Analysis Reports & Analytics Settlements Confirmations Processing Accounting
  10. 10. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 10 Transaction Processing in TMS  Visibility into existing positions and exposures  Ability to calculate expected prices  Manually capture transactions executed in the market  Interface transactions in from banking and trading platforms Visibility Pricing Trade Capture MTM
  11. 11. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 11 Transaction Processing in TMS  Establish and maintain limits  Track risks  Perform scenario analysis – What if? – Stress testing  Create reports – Internal – Regulatory Limits Market & Credit Risk Scenario Analysis Reports & Analytics
  12. 12. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 12 Transaction Processing in TMS  Generate settlements  Electronic confirmations  Verification and approval processes  Generate accounting entries Settlements Confirmations Processing Accounting
  13. 13. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 13 Currency Risk Management in Your Treasury Solution  Analyze global currency positions  Support cash flow and balance sheet hedging programs  Comprehensive exposure management workflow and interactive reporting  Formally designate cash flow hedge relationships  Mark-to-market valuations and sensitivity analysis
  14. 14. Best Practices for Managing Currency Risk
  15. 15. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 15 Best Practices Front Office Middle Office Back Office Functions related to identifying, classifying and aggregating exposures. Exposure Management Processes related to mitigating risks including strategy determination, position monitoring and hedge execution. Processes that monitor FX activities for policy compliance (limits, Cparty risk etc.) and hedge program performance. Processes related to the settlement and accounting of all accounting activities.
  16. 16. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 16 Best Practices Income Statement Revenue COGS Gross Margin Expenses Operating Income Other Income/Expense Net Income Order to Cash (O2C):  Forecast items  Foreign currency revenue Purchase to Pay (P2P):  Forecast items  Foreign currency expenses Balance Sheet Assets Liabilities Equity Balance Sheet:  Remeasurement  Translation Best Practices  Forecast transactions – Required to mitigate impact on gross margin  Invoice in functional currency (pass risk)  Take advantage of natural hedges/ align currency profile  Centralize exposure collection Front Office Middle Office Back Office Exposure Management
  17. 17. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 17 Best Practices Front Office Process  Policy determination  Strategy determination  Trade Execution Best Practices  Alignment of economic and accounting objectives – Hedge accounting  Centralized execution of all FX transactions  Standardized trade execution channels  Banking relationships Exposure Management Middle Office Back Office Front Office
  18. 18. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 18 Best Practices Middle Office Process  Policy compliance – Counterparty limits and monitoring – Trade execution limits  Performance management  Testing Best Practices  Real time limit monitoring  Counterparty credit monitoring  FX program performance reporting – Gross and net impact of exposures/hedges – Relate to corporate performance Exposure Management Front Office Back Office Middle Office
  19. 19. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 19 Best Practices Exposure Management Front Office Middle Office Back Office Back Office Process  Confirmations  Settlement  Accounting Best Practices  STP – Straight Through Processing  Automated confirmation matching  Settlement Netting  Automated accounting of cash and month-end entries
  20. 20. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 20 Additional Resources Kyriba Financial Risk Management fact sheet Get PDF at: http://kyri.ba/RiskManagementSlipSheet eBook: The CFO’s Toolkit - Minimize Risk and Ensure Compliance Get PDF at: http://kyri.ba/minimizeriskebook
  21. 21. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 21 Thank You For Attending facebook.com/kyribacorp twitter.com/kyribacorp linkedin.com/company/kyriba-corporation youtube.com/kyribacorp slideshare.com/kyriba kyriba.com/blog

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