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Q1: Revision on the concepts learned in L1.

It is extremely
important to grasp the correct understanding of the concepts
and the meaning of the respective terms to pave the
foundation for the subsequent lessons.

risk tolerance and goal) .What is Treasury? • The efficient management of the liquidity and financial risk in the business i. treasury management is best described as the proper use and administration of the funds flow through an organisation that results in the maximum level of profitability within its risk and return profile (which reflect the attitude of the BOD.e.

E: economy indicator. . • P: impose control on the currency transaction can increase biz cost.e.Nature of treasury managementIts origin • Increasing complexity and dynamism.rate of change in the identified risks and factors is very fast (as compared to fixed exchange rate system under Breton Wood Agreement which the treasurer's job could be very dull) • The impact of external factors i. T: smoothen treasury management. S: consumer behaviour. PEST and Porter 5 Forces exerted on the organisation. • Therefore company need to proactively manage corporate financial resources in the most efficient and effective way through the use of hybrid capital instruments.

. • Risk averse • Able to communicate with bod explaining the risks and choices that increase company’s profitability.Skills needed in Treasurer • Treasurer must be able to understand all risk on cash flow and decide the most appropriate decision to maximize the company’s profitability and increase liquidity.

Linkage with corporate strategywhat types of decisions to be made by treasurer? • Investment decision • Financing decision • Dividend decision – how many awards should to given .

Treasurer’s Role • 3 level of strategy – Strategic level (set objective) – Tactical level (how to make this workable) – Operational level (implementation) • 4 main functions – – – – – Funding management Liquidity management Currency management Banking relationship management Special case in CTM* .

Strategic Tactical Operational • Fund management • Liquidity management • Currency management • Bank relationship management • Special case in CTM .

system.how to obtain.set treasury management policy • Organisational control issues. and documents • Process control issues.Treasury Control Framework (TCF) • Governance issues. keep and distribute information (management reporting and operational reporting) . middle (risk management) and back office (support.assess to physical and intellectual asset.monitor dealing activities • Informational control issues. settlement and control) • Access control issues.segregation of duties to front (daily operation).

mitigate.to generate profit.Treasury management in modern era • Decentralised to centralised (to obtain cost savings: centralised companies can lower borrowing and fx trading cost more easily than decentralised companies) • Cost (support) function to profit centre function (cost function.to control cost. Profit function. High performing treasuries systematically identify. and profit from market risk) .