This presentation covers best practices, concerns and solutions of managing foreign currency risk, and the tools that can help your organization deliver more business value. The session will cover a range of topics, including: -Managing foreign currency risk from the treasurer and treasury manager viewpoint -Delivering risk management solutions that meets the needs of treasury teams -Implementing risk management solutions that stay on target, on time and within budget -Best practices and innovative solutions to managing foreign currency risk Featured Speakers: Robert Pierson, Vice President of Risk Management Services, Kyriba Leslie Slater, Principal Consultant and Owner, 3PO Consulting

1. Managing Foreign Currency Risk:
Best Practices from the Treasury Professional
and Technology Solutions Provider
February 18, 2014

2. Managing FX risk from the treasurer
and treasury manager viewpoint

3. Managing FX risk
What are the concerns?
• Increased visibility into cash and exposures
• Accurate and timely forecasts
• Risk management and mitigation
*Visibility*
• Optimization of hedging strategies
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
3

4. Increased Visibility
Cash
Treasury as a strategic partner
•
•
•
Effective financial decisions
•
Financial positions
•
Global visibility
•
•
•
Financial controls
•
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
Investment
*Visibility*
Debt
Intercompany
Foreign exchange
Exposures
•
Productivity
Bank reporting
Cash positioning
Forecasting
Liquidity
•
•
Foreign exchange
Interest rate
Counterparty
Supply chain
4

5. Accurate Forecasting
50%+ of financial executives cite visibility into data as
the barrier to effectively forecast risk metrics
Source: 2013 AFP Risk Survey
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
5

6. Risk management and mitigation
Barriers to effective Risk Management
Source: Aberdeen Group, January 2013
© 2013 Kyriba Corporation. All rights reserved.
PRIVILEGED & CONFIDENTIAL.
6

7. FX risk technology and implementation
What are the concerns?
• Providing controlled transparency into cash and exposures
• Providing functionality for accurate and timely reporting
• Providing useful risk management and mitigation tools
• Providing functionality, tools and utilities for multiple
hedging strategies
• Adherence to regulatory and compliance standards and
incorporating changes
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
7

8. FX Risk Management Solutions

9. Providing visibility
1) Consolidate data in one central repository
2) Refine accuracy to build confidence in the data
3) Leverage and implement technology to maintain
consistency via:
• Integrating multiple data sources (ERP)
• Sustaining recurring models
• Supporting remote users
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
9

10. Assessing the Risks
• Exposures
o Assets vs. Liabilities
• Positions
o Cash vs. Liquidity
• Forecasting
o Actuals vs. Projections
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
*Visibility*
10

11. Managing the risks
• The known…..
o
o
o
Payables, receivables
Cash positions
Derivative positions
• The unknown…
o
o
o
Future payables and receivables
Market impacts on cash and derivative positions
Regulatory impact on balance sheet and income statements
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
11

12. Risk technology solutions
• In-house
• Client-server
• SaaS (Software as a Service)
o Accessibility by remote users
o Standardization
o Best practices
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
12

13. Objectives of Implementing
Risk Solutions

14. Visibility Objective
Proper implementation can help strengthen:
• Visibility into cash
• Visibility into exposures
• Visibility into market conditions (Rates/Prices)
Quality data + Quality analysis = Better decisions
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
14

15. Forecasting Objective
Proper implementation can help analyze:
• Impact on cash flow
• Impact on profitability
• Impact of changes in assumptions
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
15

16. Risk Management Objectives
Proper implementation can help manage:
• Remote users
• Multiple workflows
• Timely reporting
• Consistency and reliability of data
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
16

17. Hedging Objectives
Proper implementation can help execute:
• Balance sheet and cash flow programs
• Complex hedging strategies
• Hedge effectiveness assessment
• Hedge accounting
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
17

18. Regulatory Objectives
Proper implementation can help maintain and track:
• Regulatory requirements per global regions
o FASB = United States
o IASB = Europe
o IFRS = “Both”
• Regulated hedging actions / strategies
• Changes in regulations
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
18

19. Conclusion
Proper implementations will:
• Addresses concerns of treasurer / treasury manager
AND technology vendor
o Visibility into cash and exposures
o Accurate and timely forecasts
o Risk management and mitigation
o Optimization of hedging strategies
o Regulatory requirements
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
19

20. Additional Resources
Aberdeen Group Report:
Treasury and Risk Management
http://kyri.ba/1hsiXqx
Kyriba Financial Risk Management Solution
http://kyri.ba/1hsj4T3
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
20

21. Contact Kyriba
kyriba.com/blog
twitter.com/kyribacorp
linkedin.com/company/kyriba-corporation
facebook.com/kyribacorp
slideshare.com/kyriba
youtube.com/kyribacorp
© 2014 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
21