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Financial Risk Management

Several parameters can substantially impact a company's global operations. These include: changes in interest rates, inflation, exchange rates, and commodity prices. In order to hedge the exposure to these risks, a company must appropriately manage the exposure to these risks, while considering the overlapping effect between the various risks.

Financial Risks Survey

  1. Performance of a comprehensive risk survey in order to analyze the effect of each of the following risk factors: foreign exchange, interest, inflation, commodities, and energy, and to estimate their potential resultant risks.

  2. Building a platform for gathering the relevant data in real time.

  3. Both quantitative analysis of the exposure — while continuously refining the process of estimating economic (budgetary) exposures — and qualitative analysis (looking beyond the numbers, considering business factors such as credit risk and competition).

  4. Assistance in the automated process for the purpose of quantification, continuous presentation and analysis, in order to upload it to the Exposures module in the computer system.

  5. Updating the Financial Risks Survey on an annual basis in accordance with the business changes.

Formulating a Financial Risk Management Strategy

  1. Performing Market Scenario Analysis (for exposures) to present the significance of the risk's realization to management.

  2. Performing Hedge Scenario Analysis (including highly complex analyses) to present the feasible hedge strategies, while taking into account cost effectiveness.

  3. Present the chosen risk management strategy for the company:

    • Simple quantitative objective targets
    • Monitoring, command, control, and reporting capabilities
    • Consideration of the impact of hedge accounting
  4. Updating the strategy according to the lessons learned

  5. Provide assistance in the quantitative assessment of the contribution of the CRO

Dedicated Software for Implementation and Integration of the Risk Management Strategy

  1. Assistance in integrating the risk management strategy by means of CompuHedge software for the following purposes:

    • Command, control, and reporting to management
    • Providing an operational tool for the managerial level
    • Front, middle and back office abilities
    • Continuous use of predetermined scenarios

Audit of Organization's Financial Risk Management

1. Review of the process for gathering financial exposure data.

2. Review of exposure analysis processes

3. Review of formulation of financial risk management strategy process

4. Review of application and integration of the financial risk management strategy process

5. Review of hedge accounting processes (if relevant)