Strategic Treasury Management

Strategic Treasury Management can be thought of as covering three key functions from an organisational perspective:

  1. Raising of the financing required to support business strategy and growth
  2. Management of cash surpluses to balance security, liquidity and yield
  3. Management of the financial risk exposures of the organisation

Treasury strategy should be driven by and support the commercial and strategic objectives of a company, and not the other way round.  All but the simplest of organisations will be faced with one or more of the above three treasury challenges, and so it will often be essential for an organisation to develop a treasury strategy to support its business plan. In particular, liquidity risk (essentially the risk of a business running out of cash for some reason) is often one of the most significant risks faced by an organisation, particularly for highly indebted businesses. The management of liquidity risk is intrinsically linked to treasury management which often ensures that treasury management strategy features highly on any board agenda. The treasury strategy should always be supported by a robust treasury management policy which sets out the over-arching framework of treasury governance and controls.  Within a treasury strategy we would expect to see the following key items covered:

  1. Assessment of the treasury implications of the business plan and strategy, including analysis of funding requirements and financial risk exposures
  2. Clear analysis of the current treasury position, showing all debt, derivative and cash positions
  3. Analysis of existing treasury risk exposures, particularly liquidity, interest rate, and counterparty risks
  4. A clearly worked up treasury strategy to address each of the identified treasury risk exposures, including an options appraisal (containing qualitative & quantitative analysis) in respect of any transactional recommendations
  5. Assessment of impact on treasury policy and any recommended changes

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Jason Murphy

Jason Murphy

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George Karalis

George Karalis

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