Policies provide strategic direction for organizations, while processes and procedures enable organizations to achieve results. Processes consist of sets of steps, and procedures are individual steps within processes. For example, a hedging policy directs an organization's financial risk management activities, processes determine how transactions are confirmed and settled through individual procedures. An organization's management covers roles, responsibilities, decision making, reporting, constraints, and legal requirements which must align with its goals and objectives. Financial policies clearly state objectives and strategies, and developing such policies requires determining goals, risk tolerance, and provides mandate to avoid judgment in hindsight.

1. Policies, Processes, and Procedures
An organization's policies provide a strategic direction to its activities. While
its processes and procedures enable it to get the required results. Processes
are sets of steps that together provide and appropriate activity. Procedures are
individual steps in a process.
For example, the activity of hedging is to manage financial risk that arises
from changes in market rates, such as interest rates, exchange rates, and
commodity prices. A hedging policy provides specific direction on the methods
that should be taken by an organization in its financial risk management
activities. Processes will determine how transactions are confirmed and
settled. With individual procedures conducted by various individuals in the
process.
An organization's management covers roles, responsibilities, and authority,
how business decisions are made, reporting requirements, constraints on
activities and exposures, and legal and audit requirements. Each of these areas
must be considered in light of the organization's goals and objectives.
Financial policies provide a clear statement of objectives and strategies. In
developing such policies, it is necessary to determine broad strategic goals and
risk tolerance. The existence of policy provides treasury staff and management
with mandate, which enables the organization to avoid judgment by hindsight.