Financial Risk Management Seminar: "Risk or Hedge: Insight Into Alternatives"

(Approximate presentation time: 75 minutes)

The rule of the game relating to "take a risk or hedge" is that there are no rules in a corporate context. A financial risk manager must act upon whatever strategy is best thought to suit the risk appetite of the company and pursue appropriate policy-dictated actions.

A company either actively pursuing a "do nothing" policy with respect to managing financial risks or pursuing such a policy by default (perhaps due to misinformation or ignorance) is in fact doing something, namely putting that company into yet another commercial activity, being speculation on financial markets prices.

The financial markets risk-taking attitudes of bankers - the purported "professionals" who are often thought to be big risk takers in financial markets - are examined. Risk-taking lessons are then be drawn from the professionals' actions.

Financial markets transactions which mitigate financial risks are discussed.

It is shown how financial derivatives can be used to manage price risks - but only when the derivatives are used appropriately. Used inappropriately, financial derivatives can lay the foundations for financial disaster!

Specific content includes the following topics.

Financial Risk Management Seminar or Keynote Address: "Managing Financial Risk"

(Approximate presentation time: 45 minutes)

This presentation is based upon the premise that it is (perhaps counter-intuitively) possible to attain a large measure of financial risk management certainty - even in an uncertain world!

However, attaining certainty is heavily dependent upon a sound financial risk management policy foundation. The presentation therefore focuses upon the fundamental elements in constructing and implementing an appropriate financial risk management policy that, once implemented, will then allow a company to concentrate on its core commercial activities.

Important aspects of policy-making that are reviewed include:

• defining an attitude towards financial risk acceptance
• exposure reporting systems
• financial controls, limits and authorities and
• performance measurement.

Ten crucial questionsare discussed that company directors must be able to answer if they wish to avoid the preconditions for financial markets "ugly incidents".

The presentation concludes with a review of a number of principles for maintaining good financial health that should never be forgotten by company directors.

At the conclusion of this presentation, directors and senior managers of companies having financial markets exposures will be equipped with an understanding of fundamental financial risk management principles. They will be equipped to proactively "ask the right questions" (and analyse the answers to those questions) that may well contribute significantly to their company's future solvency.

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