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Enhanced management reporting dashboards: three key benefits for financial risk management

  • stephen barr headshot

    Authors

    Stephen Barr

    Product Manager
    ChathamDirect

    Corporates | Kennett Square, PA

  • jason kirwan headshot

    Authors

    Jason Kirwan

    ChathamDirect

    Corporates | Kennett Square, PA

Summary

To inform strategic and tactical decision making, treasury teams must capture and aggregate data from across the organization. Enhanced management reporting provides a relevant graphical overview of your risk management program, enabling you to dive into details and take appropriate next steps.

Key takeaways

  • With the visual insight gained from enhanced management reporting, you can assess which of your entities has the largest exposure, which currencies have the greatest trade notional, or how your derivative transactions are spread across counterparties.
  • As currency markets shift, you can access the current mark-to-market value of your FX portfolio and how it evolves over time.
  • With a clear view of evolving exposure forecasts, your actual hedge positions, and your expected hedging targets, you gain clarity on what to hedge and when.

The best financial risk management programs capture and aggregate data from across the organization to inform both strategic and tactical decision making. Having insight into accurate, timely, and complete information gives you the details you need to answer crucial questions about your existing exposure and the effectiveness of your risk mitigation plans. Business intelligence tools give you a relevant graphical overview of your risk management program along with the crucial ability to dive into details and take appropriate next steps. In working with treasury teams across multiple organizations, we see three important benefits to enhancing management reporting with expert business intelligence resources.

1. View your FX program at-a-glance

The first key benefit you gain from enhanced management reporting fueled by business intelligence comes from the discernment gained through a graphical overview of your FX program. The quick visual insight allows you to assess which of your entities has the largest exposure, which currencies have the greatest trade notional, or how your derivative transactions are spread across counterparties. You can tell at a glance what the current value of your trades is across various criteria and easily filter the view to display exactly what you need to assess.

FX Portfolio Overview dashboard

Look at net notional by index, counterparty, and entity for an at-a-glance view of your FX portfolio

When you see a particular area of risk that requires deeper analysis, business intelligence reporting facilitates quickly diving into the details beneath the picture, providing all the information you need to respond to evolving market conditions. If your primary concern is with trades in a specific currency or with a given counterparty, these tools allow you to drill directly into that piece of your data, viewing updated charts on screen or exporting the data to promote additional analysis. Whether you need a broad overview of your entire FX program or a specific visual slice of the data to provide to management and other stakeholders, business intelligence reporting puts your data at your fingertips both on screen and through pdf exports.

FX trading summary dashboard

Easily view new hedges by trade date, trade tenor, and currency

2. Monitor the mark-to-market value of your portfolio

Second, enhanced management reporting informs your FX operations by providing insight into the cash and P&L impact of your FX derivative program. As currency markets shift in an often volatile world, you need to keep an eye on the changing mark-to-market value of your FX portfolio; this is especially true when you have a balance sheet hedging program or a significant book of undesignated trades where changes in value will flow directly to your reported P&L. Business intelligence reporting grants you easy access to both the current value of your derivatives and how that value has moved over time; it also gives you insight into how soon those derivatives will mature and what exposure that produces with different counterparties.

Portfolio overview mark-to-market dashboard

Monitor the changing mark-to-market value of your FX portfolio

Knowing the current value of your derivatives gives you valuable insight into the expected cash impact when those trades mature. Whether you gross settle your FX trades or net settle by counterparty – or even across counterparties – you want as much information as possible about the cash impact of settling those derivatives. Business intelligence reporting grants you that insight either across your entire book of trades or at a more granular level, allowing you to plan cash management and trade rolling instead of being caught by surprise.

Trade details and maturing trades dashboard

View the current value of your entire book of trades and access granular details, as needed

3. Gain clarity on what to hedge and when

Third, by incorporating business intelligence into your enhanced management reporting you gain clarity on what to hedge when with a clear depiction of your evolving exposure forecasts, your actual hedge positions, and your expected hedging targets. If your organization manages exposure forecasting with spreadsheets, tracking your projected revenues and expenses and your current hedge positions versus targets on spreadsheets; over time you may see your program become size-constrained and hard to audit as it grows beyond these manual tools. Business intelligence reporting grants you best-in-class insight into the sources of your FX exposures, the level of your current hedging compared with your target goals by currency, and how much unhedged exposure you have for a given currency or entity.

Cash flow hedges and exposures dashboard

View your cash flow hedges and exposures and compare hedge percentages against targets

Additionally, you can compare historical forecasts with realized actual expense and revenue numbers, providing the insight you need to determine which entities or exposure types support the highest levels of accurate hedging. Real-time visibility into evolving exposures and the effectiveness of your hedging program allows you to materially reduce month-end scrambling for data and empowers timely decision making on what to hedge in order to reduce volatility.

cahs flow forecast accuracy view

Compare your FX cash flow hedging performance against forecasts

Enhanced management reporting fueled by business intelligence provides you the insight you need to run your FX program more effectively. Quick access to data grants you both an overview of your hedging program and the detailed analysis your stakeholders expect. Whether you need a portfolio overview, details about the cash and P&L impact of your hedging program, or insight into what hedging steps to take when, solid business intelligence reporting offers you the details you need to answer crucial questions about your existing exposure and the effectiveness of your risk mitigation plans.

About ChathamDirect

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.


Schedule a demo

Ready to learn more about how ChathamDirect’s new enhanced management reporting dashboards can give you more insight into your financial risk? Complete the form to schedule a demo.

About the authors

  • Stephen Barr

    Product Manager
    ChathamDirect

    Corporates | Kennett Square, PA

  • Jason Kirwan

    ChathamDirect

    Corporates | Kennett Square, PA


Disclaimers

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.

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