We have developed close to 500 risk management policies for companies in the widest possible range of industries. We engage with key stakeholders in treasury and other business functions to get a detailed understanding of business profile and flow of risk. This enables us to the company’s risk profile covering different types of FX flows as well as, in certain industries, rupee- denominated flows which may be linked to USD rate and price

We set out the specific objectives of treasury in terms of risk mitigation, opportunity capture and preference for protecting the budget rate (cash impact) and/or accounting rate (P&L impact).

Once the Treasury objectives are articulated and agreed upon, we develop a strategy to achieve those objectives without depending excessively on market views. The strategy sets a risk limit – the worst-acceptable rate under any possible market scenario – and lays down processes to

1. ensure that the risk limit is never breached, and
2. capture a reasonable amount of opportunity if market moves favourably

For companies with commodity exposures, the policy articulates the commodity risk management framework and builds the FX component of commodity risk into the FX risk profile.

The policies we articulate define an end-to end process covering risk identification, risk measurement (benchmark setting and risk limits), risk monitoring, and risk management with specific triggers for hedging. They are designed to ensure zero regulatory slip, and also cover the treasury org structure with authorisation matrix, MIS protocols and permitted instruments.