Once regarded as just an offshoot of the accounting department, the corporate treasury department

has now become a strategic business partner, with the treasurer role requiring intimate knowledge of
the business in order to mitigate financial risks. In todays scenario, the main two activities that
treasuries need to perform can be categorized under –
1. Financial risk management which includes dealing with risks arising from currency ,commodity
prices and interest rate movements. This is important in order to protect business margins from
volatility in the markets.
2. Reducing the cost of borrowing and optimizing the risk return profile of investible surplus
In the Indian context, the focus is greatest on liquidity risk, funding and forex risks with surveys
suggesting that a large number of treasurers are worried about liquidity risk. Also, the recent volatility in
the currency markets have put pressure on companies to hedge their exposures to currency risk.
Comparatively, commodity and interest rate risk have lower importance. Current risk policies in India
centre around establishing mechanisms for measuring, monitoring, controlling and reporting of key
risks. Most corporates today have KPI’s defined for FX and interest rate risk, cash management and
funding. Operational risk KPI’s are not that prevalent though many companies have policies on how to
deal with it.
Globally, technology has been accepted as critical to having a better visibility on risks, and improving
efficiency. In India,however, the scenario is different with most of the work still being done
spreadsheets , with the extent of technology adoption quite low. With increasing complexity and
volume of transactions, the need for increase in automation will keep increasing. Also, the value that
can be derived from having an integrated risk management framework has not been realized in India,
with over – emphasis on financial risk and lack of technology investment in risk.
Cash management has attained increasing prominence, with companies focusing on getting a better
understanding of the cash position as well as forecasting in order to enable a proactive approach
towards managing their investments. A majority of corporate are doing monthly cash flow forecasting as
well as techniques such as variance analysis.
Going forward, the future of corporate treasury management in India lies in laying down an integrated,
holistic and robust frame-work that deals with enterprise-level risk of all types including financial. This
will need integration of the treasury management systems with the other platforms of the business in
order to lend better visibility assurance to external and internal stakeholders. The efficient utilization of
technology is critical to aligning the scope of corporate treasuries to main business objectives, and is
imperative with the increasing complexity of markets and regulatory changes.