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Sound treasury risk management requires a thorough understanding of the key financial markets and instruments used to effectively manage risk, capital flows and debt financing. In the light of the current financial challenges facing the global finance industry, a strong working knowledge of risk management practices, treasury functions, financing and investment strategies is paramount to the success of any corporate entity. This course is of extreme relevance to those actively involved in the treasury risk department, treasury sales, corporate finance, risk management, executive finance, accountancy and audit.
WHAT YOU WILL LEARN
The objective of this two-day comprehensive practical based workshop is to cover the fundamental aspects of treasury risk management and the variety of key financial instruments available. Delegates are assumed to have a working knowledge of banking and finance as well as some basic financial mathematics along with the ability to use spreadsheets for applied problem solving. The course will be intensive and thorough building on the basics through to some advanced modelling and risk management techniques. Hence, it should be useful for the junior newcomer to the financial markets as well as those actively managing and utitlising treasury products. The teaching methods will include lectures, exercise classes, group discussions, and workshop sessions.
Participants will benefit from a thorough understanding of how the individual markets and key financial products work as well as understanding the rationale and risk management strategies that treasury managers employ on a day-to-day basis. In particular, participants will gain knowledge of the instruments used from the money, capital and derivatives as well as further support their progress with computer based workshop classes and simulations.
The course will be intensive and thorough building on the basics through to some advanced modelling and risk management techniques. Hence, it should be useful for the junior newcomer to the financial markets as well as those actively managing and utitlising treasury products.
This course is of extreme relevance to those actively involved in the treasury risk department, treasury sales, corporate finance, risk management, executive finance, accountancy and audit.
Course categories:Risk Management Courses, Treasury Courses, Risk Management Inhouse, Treasury Inhouse
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INTRODUCTION
- What is the treasury function?
- The treasurers role
- Types of risk to manage
CASH AND MONEY MARKETS
- The forward market
- Forward transactions
- The mechanics of Forward Rate Agreement (FRAs)
- Hedging and trading with FRAs
- Short Term Interest Rate (STIR) futures
- FRAs and futures
- Workshop: Analysing the use of FRAs and futures in Risk Management
INTEREST RATE RISK MANAGEMENT
- What is GAP analysis?
- Types of GAP analysis
- Advantages versus disadvantages
- Duration, Present Value of a Basis Point (PV01s) and Dollar Value of a Basis Point (DV01s)
- Modified and Macaulay duration
- Convexity adjustment
- Hedging with duration and convexity
- Workshop: Managing Interest Rate Risk with Gap Analysis
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SWAPS
The swaps market
Different swap contracts:
- Interest rate
- Currency
- Basis
- Forward
- Actual/Actual (Act/act), Actual/360 (act/360) and 30/360
- Discount factors
- Constructing yield curves
- Valuing cash flow legs
- Net Present Value
- Workshop: Pricing and Managing a Swaps Contract
THE FOREIGN EXCHANGE PRODUCTS
- The FOREX market
- Quoting conventions
- Spot & forward transactions
- Factors affecting currency markets
- Cross rates and cross trading
- Currency arbitrage
- Workshop: Modelling and Managing FX Instruments
FUNDAMENTALS OF DERIVATIVES MARKETS
Overview of derivatives:
- What are derivatives?
- Risks involved
- Gearing and leverage
- Market liquidity
- Payoff and Profit & Loss (P&L) profiles
- Black and Scholes model
- Put-call parity
- The Greeks and hedging with options
- Interest rate caps, floors and collars
- European swaptions
- Workshop: Valuing Options and their Risk Management
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