This module is suitable for first year Accounting studies and is aligned to:
- Accounting 1A (UNISA FAC1501)
Understanding the importance of Risk Management and Treasury Operations is paramount to any employee in this environment.
This publication will highlight and discuss all aspects related to the management of risks in the treasury environment as well as the various functions that are performed in the Treasury Operations area in an easily understandable and comprehensible structure to ensure that the learning experience is fruitful, enjoyable and rewarding.
The content is divided into separate modules. Each module covers a different topic related to the Treasury Operations function as well as the various types of financial and non-financial risks that are prevalent in a Treasury environment.
The publication is aimed at individuals who wish to enhance their knowledge and understanding of the Risk Management and Treasury Support function. Although the course does not cover great detail regarding these functions, it does ensure that a general overview and solid understanding is formed of the different types of risks, the process of risk management and the importance of the support function of a treasury operation.
Risk Management: The Importance of Risk, Risk Management Process, Risk Mitigation Approaches, Risk Management Techniques, Risk Decomposition, Banking Supervision and Regulations (The Basel Committee; Basel III), Risk Categories and Definitions, Segregation of Duties
Currency Risk: Foreign Exchange Rate Risk, Banks and Foreign Exchange Risk, The Foreign Exchange Market (Spot Market; Forward Market), Associated and Created Risks (Liquidity; Sovereign Risk/Political Risk; Economic Risk), Associated Risks for Corporates.
Interest Rate Risk: Sources of Interest Rate Risk (Re-pricing; Yield Curve Risk; Basis Risk; Optionality), Management of Interest Rate Risk (Trading & Speculation)
Liquidity Risk: Management of Liquidity Risk, Regulators (Basel III global requirements), Other Factors Affecting Liquidity
Credit Risk: How Credit Risk Arises, Setting a Credit Strategy, Know Your Client ("KYC"), Principles for Management of Credit Risk, Common Sources of Major Credit Problems, Mark-to-Market Effect on Derivative Exposures, Determination of Customer Risk Management (Treasury Policy; Hedging; Types of Exposure; Risk Identification; Risk Quantification, Credit Risk Mitigation (Security; Collateral; Credit Derivatives; Credit Pricing; Recovery Risk; Limits and Control)
Settlement Risk: Causes of Settlement Risk, Customers and Settlement Risk
Operational Risk: Legal Risk, Documentation Risk
Treasury Support: Steps in a Typical Trade Cycle, Importance of Settlement, Relationships and Responsibilities, Settlement Conventions, Settlement Process, Nostro and Vostro Accounts, Product Accounting and Control