Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Protecting Global Cash from Currency Risk

26 views

Published on

Every quarter organizations suffer reduced earnings and loss in value of cash flows due to ineffective hedging programs. In this session, FireApps will lead a best practices discussion on how treasury can identify and protect balance sheet accounts and forecast cash flows from currency volatility. Key topics include how to find data in your ERP, how to aggregate currency exposures, and different technology solutions to become more business intelligent about FX risk.

Published in: Software
  • Be the first to comment

  • Be the first to like this

Protecting Global Cash from Currency Risk

  1. 1. PROTECTING GLOBAL CASH FROM CURRENCY RISK
  2. 2. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. PRESENTER FIKRE BIZUNEH FiREapps Vice President of Risk Analysis Bizuneh has more than 13 years of experience in FX exposure management, workflow design, treasury systems integration and process improvements. Prior to joining FiREapps, Bizuneh oversaw both balance sheet and cash flow FX exposure management programs at Alcatel-Lucent and Lucent Technologies.
  3. 3. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. ONE WAY TO PROTECT CASH BUILD END-TO-END HEDGING PROGRAM GOALS: • Protect the enterprise from currency impacts • Identify and manage exposures throughout their lifecycle • Implement a multi-dimensional approach • Have a clear roadmap Always be ready for change and design the processes with that in mind.
  4. 4. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. WHERE TO START START WITH THE LOW HANGING FRUIT • Where can you get the most impact with the least effort? • Define a starting point • Outline a path to take to reach the “final” destination • Prepare for detours
  5. 5. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. DIMENSIONS HEDGING STRATEGIES EVOLVE IN DIFFERENT DIMENSIONS • Geographical • System landscape (data source) • Risk tolerance Always look for interdependency between these dimensions. • Process related • People • Reporting requirements
  6. 6. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. GEOGRAPHICAL EVOLUTION WHERE DO YOU START? • From “home” • With the “easiest” entity to get information from • With the entity with the largest exposure • With the entity with the most FX Gains/Losses ADDITIONAL LAYERS • Different currencies • Different businesses and exposure types • Introducing different people to the process
  7. 7. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. SYSTEM LANDSCAPE CHANGES SINGLE VS. MULTI-ERP ENVIRONMENT • In what system is the majority of the exposure? • Is there an efficient way to get the data out? • Start with the most efficient ones OTHER CONSIDERATIONS • Consolidation of systems • Implementation of new systems
  8. 8. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. RISK TOLERANCE DIFFERENTIATING BETWEEN EXPOSURE VS. RISK • Relating to FX Gains/Losses • Looking for additional efficiencies IT IS MOST VISIBLE CHANGE • Increase or decrease in trade volume • Increase in hedging frequency • Increases in the number of currencies to hedge • Use of advanced instruments
  9. 9. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. BUSINESS PROCESS CHANGES SINGLE VS. DAILY RATE ENVIRONMENT • Moving into more frequent cycles • Forecast vs. actual based processes INTRODUCING DIFFERENT EXPOSURE MITIGATION PROCESSES • Incorporating cash request into hedging process • Exposure and/or trade netting • Intercompany settlement and netting processes INTRODUCING OTHER PROCESS RELATED EFFICIENCIES • Lean or six-sigma programs
  10. 10. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. PEOPLE People are the most important factor in the success of a hedging program, but the most frequent changes happen here. KEY OBJECTIVES • Keep building knowledge • Train individuals with the final destination in mind • Increase individual participation
  11. 11. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. REPORTING REQUIREMENTS As the program evolves, so does the need for reporting • Hedge performance KPIs • Other stakeholders want to be informed • Risk committee formations
  12. 12. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. WHAT ELSE • Mergers & acquisitions • Sale of business
  13. 13. © Rim Tec Inc. All rights reserved. Proprietary & Confidential. FINAL THOUGHTS Build your hedging program with the exposure lifecycle in mind! Cash is final phase in an exposure lifecycle • To protect cash, manage exposures from inception
  14. 14. Q&A

×