Risk management is an important aspect of any business, and the treasury function is no exception. Undoubtedly, this job role has seen a 6% growth since 2020 with an average salary of 14 lakhs per annum.
A treasury risk management strategy can help a company identify, assess, and mitigate potential risks that could impact its financial health. It is responsible for managing a company's financial resources and ensuring that they are used most efficiently and effectively as possible.
Those who want to enter this ever-growing field should complete financial markets certification courses like the IIM Indore CFO program.
Checklist For Treasury Risk Management Strategy
The following is a checklist to help you develop a comprehensive treasury risk management strategy:
1. Identify the risks:
The first step in developing a risk management strategy is to identify the potential risks that your company may face. These could include market risks, credit risks, and operational risks. It's important to conduct a thorough risk assessment that takes into account all risks and their impact. This process should involve all stakeholders, including the treasury team, business units, and senior management.
2. Assess the risks:
Once you have identified the risks, it is important to assess their likelihood and potential impact on your company. This will help you prioritize which risks to focus on and develop essential strategies. The risk assessment process should take into account the following:
The likelihood of the risk occurring
The impact of the risk
The residual risk after decision making
3. Develop a plan:
Based on your risk assessment, develop a plan to solve the identified risks. This may include implementing specific strategies, diversifying investments, or increasing transparency in your treasury operations. The plan should be tailored to each risk, taking into account the likelihood and impact of the risk. The plan should also be realistic and achievable and should be communicated clearly to all relevant stakeholders.
4. Implement and monitor:
Once you have created the strategy, it is important to put it into action. This includes implementing the necessary controls and monitoring systems to ensure that the plan is working as intended. The treasury function should establish a monitoring and control framework to ensure that the plan is being implemented effectively. This should include regular reviews of the plan and its effectiveness, as well as any necessary adjustments.
5. Communicate and train:
Effective risk management requires that all employees understand their role in managing risks. Communicate your risk management strategy to all employees and provide training on how to identify risks. This should include regular training sessions, as well as clear communication channels to ensure that all employees are aware of any changes to the risk management strategy.
6. Review and update:
Risk management is an ongoing process, and as such, it is important to regularly review and update your strategy. This will ensure that your plan remains effective in the face of changing business conditions. This should include regular reviews of the risk management strategy, as well as any changes in the business environment that may have an impact on the risks.
Treasury risk management analysts should use this checklist to assess the risks of various decisions and opportunities. To advance their knowledge, they can enroll in the "IIM Indore CFO program," one of the top Indian Institute of Management courses offered by IIM Indore.
About IIM Indore CFO Program
It is a specialized financial markets certification course provided by IIM Indore and is intended for professionals with at least five years of experience. This 12-month program provides students with a thorough understanding of management and financial services. This program will prepare you for the role of CFO by providing you with analytical, strategic, and technological skills. It focuses on Fintech, risk management, and other topics to prepare top CFOs.
Following are the various advantages of completing the IIM Indore CFO program:
Students are provided with a postgraduate degree and alumni status by IIM Indore.
It provides students with a 3-day visit to the IIM Indore campus.
Students are placed with companies like Flipkart, Amazon, Accenture, HSBC, ICICI and more.
In conclusion, a comprehensive treasury risk management strategy is essential for any company. By following the checklist, you can develop a plan that will help you identify, assess, and mitigate potential risks that could impact your company's financial health. It plays a critical role in managing a company's financial resources and ensuring that they are used in the most effective way possible.
If you want to enter this growing industry, professionals with a minimum five years of experience should join the IIM Indore CFO program to learn various analytical, strategic and financial skills to become next generation CFOs.