With our Risk Management Support Service, Treasury Services can offer permanent access to our specialised expertise. This is interesting for organisation that want to increase the quality of their risk management function or organisations that do not have a Treasury organisation of their own.

High added value can be achieved in the area of managing strategic risks or economic risk.

Strategic risk management consists of managing risks with a long term time horizon. It goes much further than managing transactional exposures or translation exposures. It needs a specialised expertise and lots of experience to create a solution in this area. This expertise is hard to find.

For many years, newspapers showed profit warnings, earnings reports being far less than expected, and even bankruptcies from companies who are all brilliant in their markets, but all in problems with their financial risks. We are able to eliminate these problems, proving that statements like “these risk can not be hedged” are false.

Concepts like “Value-at-Risk”, which was “hot” in the ’90-ies, has been proven dangerous. Read our article on this subject (Dutch) (pdf). Our risk management techniques go much further than that. It is also dangerous to believe in market views, because in the end you will find out that you end up in a 50 % probability situation. Managing these non-core risks is a quantitative process.

While creating a solution Treasury Services will go through the following logical steps:

• Quantify the strategic risks and their sensitivities, separating and bucketing different risk types.
• Create a tailor made, IAS compliant, policy. In the policy we will scientifically prove the correctness of the solution, we will fill in all relevant aspects, and we will explain the entire administrative recording of the hedging process. As a result all questions are answered at forehand. This policy can also serve as a basis for a Service Level Agreement in case you want us to (assist you to) manage these risks.
• If required we can supply a training to management, control and treasury people, so that you become fully in control.
• Engineer the initial hedge.
• Assistance in managing the hedge. Strategic risk management is much more complex than managing transaction exposure or translation exposure. Because of its long term time horizon, and because of the passage of time and changing market conditions, the hedge needs to be monitored and adjusted regularly.
• If required, we can implement a complete tailor made software solution, reducing organisation costs and ensuring that you are fully in control.