II
Corporate Treasury Risk Advisory
Exposure to commodities, energy, critical inputs and the economic cycle can erode operating margins quarter after quarter when no formal policy controls it. The policy also covers fuel, metals, agricultural inputs and the other price and demand factors that feed the margin. We quantify that exposure and design a hedging policy approved by management, then monitor and adjust it over time.
What this covers
- The factors covered: commodities, energy, critical inputs, the economic cycle, fuel, metals and agricultural inputs.
- Exposure diagnosis: physical consumption converted into a hedging notional, with an analysis of historical volatility.
- A formal hedging policy approved by the board or management, covering the coverage ratio, instruments, maturities and risk limits.
- Implementation guidance for the client’s own treasury team.
- Ongoing review and roll planning before each maturity.
- A quarterly hedge effectiveness report for management and auditors.
The problem
Exposure to commodities, energy, the economic cycle and the other factors that move the margin can erode operating results quarter after quarter when no formal policy controls it.
Our approach
We quantify the exposure and design a hedging policy approved by management, then monitor and adjust it over time.
How we work
We act exclusively in an advisory capacity. We do not manage or execute transactions on the client’s behalf and have no access to client accounts. All hedges are executed by the client’s own treasury team, with its own financial institution.
Where this is most often relevant
Companies whose results move with the economic cycle, including logistics, transport and distribution with direct fuel exposure, and companies exposed to metals and agricultural inputs.
Engagement
01
Discovery call
A call of 25 to 30 minutes to understand the exposure and the way the treasury function works today.
02
Formal proposal
A written proposal setting out scope, fees and timeline, before any engagement begins.
03
Diagnosis and policy
Exposure diagnosis and the design of a hedging policy for approval by the board or management.
04
Monitoring
Ongoing monitoring, roll planning before each maturity, and a quarterly review.
Fees
Tailored to company size and exposure. Provided in a formal proposal.
Hedging strategies involve risk, including market, counterparty and liquidity risk. Past or estimated results do not guarantee future results.
Delivered byVanttax