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Case Study

How Brunswick Corporation streamlined its financial risk management program

Summary

Brunswick Corporation streamlined front, middle, and back office treasury operations, saving 35 hours each month, by leveraging the ChathamDirect platform.

Company goals

  • Improve the treasury process and cost-effectively reduce time spent on manual, repetitive tasks.
  • Increase program transparency and controls
  • Reduce reliance on Excel models and gain the ability to provide prompt answers to senior management
  • Achieve a timely implementation, minimizing disruption to business units

Brunswick previously gathered exposures and loaded them manually into the treasury system, then manually entered trades into the 360T portal. Post trade, they needed to execute multiple steps to ensure accounting aligned with the correct trade, legal entity, currency pair, exposure, and accounting treatment. This was an extremely cumbersome process.

Key activities

  • Assessed activity hours associated with hedging to identify where technology solutions could be cost-effectively applied
  • Implemented straight-through processing, from exposure gathering to journal-entry generation and MTM calculation, through the ChathamDirect platform
  • Instituted additional controls, including dual approvals on trades placed. Eliminated the use of the corporate shared drive for trade confirmation
  • Documented processes to decrease key person risk, support cross-functional training, increase leverage of junior resources, and provide increased program visibility and controls
  • Minimized the lift for internal treasury team and business units by leveraging the Chatham team to load trades into the ChathamDirect system and conduct QA reviews

With the hedge policy for every currency pair and exposure type loaded into the system, ChathamDirect automatically analyzes exposures and recommends trades. The Brunswick team reviews and approves trades and sends them directly to the 360T portal. Executed trades flow automatically back to the ChathamDirect system for hedge accounting. Since legal entity, currency pair, exposure type, hedge type, and accounting treatment are already assigned, accounting treatment is embedded automatically, saving time and removing the risk of human error.

What’s unique about ChathamDirect exposure management functionality is that, since we have uploaded the right exposures, in addition to the hedge policy, for every single legal entity, currency pair, and exposure type, the system is able to recommend to us what hedge trades we should make. We use this recommendation as a final check while also following our internal process of hedge proposal and recommendation looking at market trends, forecast accuracy, and how our business is expected to perform.

Ash Srinivasan, Manager, Treasury and Risk Management, Brunswick Corporation

Results

  • Saved 35 hours a month by implementing more streamlined, automated process
  • Improved accuracy, controls, and audit trails
  • Increased the ability to engage in value-added analytics to make data-driven recommendations and help senior management make better decisions
  • Completed the implementation on schedule and with minimal disruption to the business units

Saving 35 hours per month gives Brunswick additional time to engage in value-added analytics and strategic priorities.

Previously, we maintained an Excel database of our trades and exposures outside of our risk management platform, entering it all into the platform and making sure the data is accurate and making sense — and all of that with about 50 different spreadsheets linking to each other. Today, we have one system of record, our ChathamDirect risk management platform, where we enter data once and slice and dice it by legal entity, currency pair, geography, and counterparty. This has saved us a lot of time and enabled us to easily obtain the data for analysis.

Ash Srinivasan, Manager, Treasury and Risk Management, Brunswick Corporation

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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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