RISK MANAGEMENT SURVEY 2011
This is the fourth year of our annual FX risk management survey.
In 2010, we had 100 respondents, which made it the largest such survey in the world. The survey is quite simple to complete – there are only 35 questions – that you can either respond to right here or get in touch with your Mecklai advisor to help you out. We believe you will find the survey valuable both in helping you focus on treasury best practices (and gaps you may have) as well as getting a reading on how your operation compares with other companies of similar scale in your industry.
Thank you for your participation and support.
To view our earlier survey report,
A. GENERAL INFORMATION
1. Last year's sales (cr)
less than or equal to 250
greater than 1000
B. IMPORTANCE OF TREASURY
2. Exports as a percentage of Sales
less than 25%
3. Proportion of Imports to Total cost
less than 10%
greater than 50%
4. What risks are managed by treasury ?
Investment / borrowing
C. Process and Structure
5. Does the company have a Board approved risk management policy ?
5 (a). When was it last reviewed and revised ?
More than 2 years ago
Between 1 and 2 years ago
Less than 1 year ago
6. Is there a independent treasury head ?
7. How many people work in the treasury on a full-time basis ?
No full-time person
more than 4
Interface with business divisions
8. How is the forex benchmark/target rate set ?
No Benchmark Rate is set
Based on the market view/forecasts
Based on the prevailing spot/forward rates
Based on budgets or business plan
8(a). Is this benchmark/target used to evaluate performance ?
Used to evaluate only Treasury performance
Used to evaluate both, Business & Treasury performance
9. If there are changes in hedged exposures, how do you treat the gain/loss on cancellation or
rollover of hedges ?
Charge it to the business P & L
Charge it to the Treasury/Corporate P & L
10. When are exposures identified as risks to be managed ?
As and when they are reported to Treasury
On the invoice date/ BL Date
On the PO/Contract date
On an estimated basis (before PO/contract date)
Other, please specify
11. If you have both exports and imports how does the Treasury manage risk ?
Manages only the net import or export position
Manages imports and exports separately
11(a). How is the natural hedge managed ?
Not managed actively
Managed only through EEFC account
Managed through EEFC and/or by covering import and export at the same time
12. Does Treasury have a mandatory hedging requirement ?
Yes, less than 50%
Yes, greater than or equal to 50%
13. Which of the following instruments may the treasury use ?
14. Do you use paid options and structures (like CALL SPREADS, Participatory etc.) as a hedge
15. Which information sources does Treasury use ?
Other, please specify
Reuters / Bloomberg
16. How does the Treasury take hedging decisions ?
Based on market views only
Based on Mark-to-market (MTM) values
Based on both, view and MTM
Reporting and control
17. Do you regularly calculate MTM for-
Do not calculate MTM regularly
only outstanding hedges
only open exposures
Entire portfolio (hedges and open exposures)
18. Is the CFO involved in hedging decisions ?
Only for major decisions
For all decisions
19. Do you have independent confirmation and accounting of transactions by a back office ?
20. Is forex performance reported to the Board ?
21. Does the treasury performance feed directly into compensation ?
22. Is there a clear distinction made between cash gain/loss and accounting gain/loss ?
23.How Frequently FX reports are prepared and circulated ? treasury?
Only on a ad-hoc basis
24. How many hours are spent per day on Treasury MIS reports and accounting ?
less than one hour
more than 4 hours
25. From where does the treasury receive exposure data
Not readily available
Available in excel sheets from various departments
Readily available in the ERP
26. How accurate is the import/export data that you use for hedging decisions ?
Has to be frequently revised for large amounts
Has to be occasionally revised
Is more or less accurate
27. For What all do you use your ERP Treasury module or your Treasury Software System ?
do not use
Use only for accounting/MIS reports
Use for day-to-day monitoring and decision making
28. How comfortable are you with your process for capturing exposure data ?
E. COMMODITY RISK
29. Does the company actively manage commodity risks ?
29(a). Who Manages the Commodity Risk ?
29(b). How is the risk Managed ?
Back-to-back transactions with customers and suppliers