Enable data-driven decision making and avoid potential pitfalls with reporting dashboards
To spot important data trends and crystalize them into actionable insights, corporate treasurers need robust reporting capabilities within their financial risk management systems. Advanced reporting tools should include a complete dataset, flexible-but-focused dashboards, and proactive trend analysis.
Few things spark the frenetic activity generated by an urgent question from your boss, “Why did our derivative mark-to-market values change so drastically last month?” Suddenly you drop the other important tasks on your plate and scramble to gather spreadsheets, data extracts, market information from your banks, and details your derivative portfolio to understand and explain the cause of those changes. Such questions leave you unearthing information on all the relevant pieces of data you can find to figure out the relationship between changing amounts of hedged notionals, unfavorable execution on trades, and changing market conditions to answer an unexpected request. One assistant treasurer noted recently that such queries regularly consume four to five hours, and they never come at a convenient time.
These frantic needs for data and insight highlight the fact that, for many corporate treasurers, the value of a risk system ties directly to the quality of reporting it enables. Reporting that pulls together meaningful data, presents it in a clear and compelling way, and provides the support and insight you need for decision making equips you to discern potential pitfalls before they occur. Without robust reporting capability from a risk management tool, you may struggle to spot important data trends or lack actionable insight into how your program is responding to evolving market conditions.
Outstanding reporting tools must empower you to accomplish three core jobs:
- Monitor the health of your risk management program, looking backward to understand what has happened and why.
- Make informed decisions with ready access to data and analysis.
- Inform your internal and external stakeholders with accurate information and visual presentation capabilities from excellent reporting.
To accomplish these core reporting jobs, you need three key things:
- A complete set of data
- Flexible, focused dashboards
- Proactive trend analysis
Together, these three components enable you to minimize surprises when analyzing and discussing your risk management program.
Comprehensive data provide the first pillar to support outstanding financial reporting. A tool must give you easy access to all the relevant information for your risk program — including timely market data, all the underlying exposures generating potential financial risk, and a complete picture of your derivatives portfolio. Whether you house that data in one central repository, or it exists distributed across multiple systems, a solid reporting engine enables you to gather, validate, and aggregate your data to capture a complete and timely picture of both your risks and your hedges. To examine the evolving values of your current portfolio, accurately determine your exposure across bank counterparties or internal subsidiaries, and understand how some positions and forecasts might offset others, you need the confidence that your reporting package accurately captures up-to-date information on all aspects of your risk management program.
Flexible, focused dashboards
Besides providing access to a comprehensive data set, your risk reporting must offer flexible but focused dashboards, empowering you to interact with the most important information for decision making. Business intelligence tools can provide the building blocks for such reporting capabilities but gaining the best use of those tools still requires creating the most appropriate visualizations of data and enabling users to drill into details as required. Outstanding risk reporting tools provide both the focused dashboards you need for viewing key financial information and the flexibility to enable fully interactive and customizable views to get you exactly the insights you need. Combining high level summaries with drill-down capability grants you big picture overviews and the capacity to home in on details and nuances to flesh out your analysis.
Proactive trend analysis
Proactive trend analysis on your risk management program delivers the third component of highly effective financial risk reporting. The ability to examine not only your current situation but also the trends across time allows you to discern patterns in forecasted exposures, underlying market conditions, and recent adjustments that can highlight unexpected changes or potential problem areas. Whether comparing forecasted exposures with actual results, analyzing seasonal trends in subsidiary performance, or drilling into fluctuations in market conditions, a reporting tool that offers proactive trend analysis can give you advanced warning of where to look for unexpected results. Rather than waiting to be asked for explanations of what went wrong after the fact, you can see areas of potential concern before they blossom into larger problems, effectively taking action earlier to minimize their impact and moving you from a reactive to a proactive position because you know when key data points move, by how much, and why.
When the tools you use for managing your financial risk support robust reporting, you can confidently monitor the health of your program, make strategic decisions on how to adjust your risk management processes and objectives, and inform important stakeholders with the data they count on. A reporting tool that combines complete data, flexible but focused dashboards, and proactive trend analysis equips you with the insights you need to avoid painful surprises.
ChathamDirect is a groundbreaking financial risk management and hedge accounting platform that supports foreign exchange, interest rate, and commodity hedging programs. ChathamDirect provides a clear view of your entire hedging program, including cash flow forecasts, balance sheet exposures, and hedge requests — all securely available on a leading SaaS platform. ChathamDirect is backed by Chatham Financial, an employee-owned, independent market leader with a global team of capital markets experts, risk management advisors, CPAs, lawyers, quantitative analysts, and technology developers who serve more than 3,000 clients annually.
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Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit chathamfinancial.com/legal-notices.
Transactions in over-the-counter derivatives (or “swaps”) have significant risks, including, but not limited to, substantial risk of loss. You should consult your own business, legal, tax and accounting advisers with respect to proposed swap transaction and you should refrain from entering into any swap transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss. This material has been prepared by a sales or trading employee or agent of Chatham Hedging Advisors and could be deemed a solicitation for entering into a derivatives transaction. This material is not a research report prepared by Chatham Hedging Advisors. If you are not an experienced user of the derivatives markets, capable of making independent trading decisions, then you should not rely solely on this communication in making trading decisions. All rights reserved.21-0159
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