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,  Click here

Name:
Designation:
Company:
Email:
A. GENERAL INFORMATION
1. Last year's sales (cr)
    less than or equal to 250    251-500      500-1000      greater than 1000
B. IMPORTANCE OF TREASURY
2. Exports as a percentage of Sales
    less than 25%       25%- 50%        50%-75%      75%-100%
3. Proportion of Imports to Total cost
    less than 10%       10%-25%        25%-50%      greater than 50%
4. What risks are managed by treasury ?
    Forex      Investment / borrowing      Commodity
C. Process and Structure
5. Does the company have a Board approved risk management policy ?
    No   Yes
    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 ?
    No     Yes
 
7. How many people work in the treasury on a full-time basis ?
    No full-time person     1-2     3-4     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 ?
        Not used    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

Treasury operations

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 ?
    No    Yes, less than 50%     Yes, greater than or equal to 50%
 
13. Which of the following instruments may the treasury use ?
    Forwards    Vanilla options    Option structures    Swaps
 
14. Do you use paid options and structures (like CALL SPREADS, Participatory etc.) as a hedge
      instruments ?
    Never use    Use occasionally    Use regularly
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 ?
    Not involved Only for major decisions For all decisions
19. Do you have independent confirmation and accounting of transactions by a back office ? 
    No Yes
20. Is forex performance reported to the Board ? 
    No Yes
21. Does the treasury performance feed directly into compensation ?
    No Yes
22. Is there a clear distinction made between cash gain/loss and accounting gain/loss ?
    No Yes
D. STRUCTURE
23.How Frequently FX reports are prepared and circulated ? treasury?
    Only on a ad-hoc basis    Quarterly    Monthly    weekly     Daily
 
24. How many hours are spent per day on Treasury MIS reports and accounting ?
    less than one hour      1-2 hour      2-4 hours    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 ?
    Not comfortable      Fairly comfortable      Very comfortable
E. COMMODITY RISK
29. Does the company actively manage commodity risks ?
    No     Yes
    29(a). Who Manages the Commodity Risk ?
        Other     Purchase     CEO     Treasury
    29(b). How is the risk Managed ?
        Natural Hedge      Futures Transactions     
        Back-to-back transactions with customers and suppliers      Long-term contracts
COMMENTS