Balancing Digital Aspirations While Addressing Risk Management Fundamentals: Observations From Citi Treasury Diagnostics

17 TREASURY POLICY: RISK MANAGEMENT COVERAGE 81% of companies surveyed have a treasury policy that encompasses the core areas of market risk with FX risk at 91%. Nearly two-thirds (64%) report projected liquidity and funding exposures at least on a monthly basis. 74% of the companies assess and report its notional FX exposures with 44% incorporating a sensitivity analysis. Treasuries with more complex exposures tend to quantify risk with more advanced tools such as value-at-risk and portfolio analysis. These quantitative modelling techniques and tools can help a corporate treasurer identify main drivers of risk, optimize hedging strategies and formulate a risk management policy. FX risk 91% Counterparty/ credit risk 89% Liquidity risk 83% Interest Rate Risk 81% 42% Commodity risk Notional amounts of exposure 74% Sensitivity analysis 44% Value-at-risk (Individual currencies) 20% Value-at-risk (Portfolio basis) 17% 8% Value-at-risk (Asset class) Treasury Policy Coverage Methodology/Reporting Daily 11% Monthly 53% Quarterly 21% Half-yearly 5% Per request 9% 1% Never Frequency of reporting projected liquidity/funding exposures