Risk Management in Treasury Essay Sample

Risk management of treasury or financial holding of an organization is quite an important aspect. Adding to this, treasury itself is a crucial part of a company and ill management of treasury can result in failure of the operation and lack of funds. Therefore in this sample essay, we shall be discussing the very same topic of “risk management in the treasury”. As such it becomes a quite important concept for management students to understand.

In addition to this, we suggest to the students reading this to also go through our sample essay, namely “enterprise risk management”. Moreover, it is closely related to this one and will also help you grasp a clearer picture of the concept.

Moving on, in this sample essay we shall discuss the following topics: What is treasury risk management ?, Importance of risk management in the treasury, Key risks in the treasury, and Risk management process in Treasury.

What is risk management in the treasury?

As we know, the treasury in business terms refers to the holding of an organization i.e. assets, capital, and other financial entities. In simple words, the treasury is another term for “finance “. As such any risk to the financial holding of an organization is known as treasury risk. Adding to this, there are many different types of treasury risk which we will be discussing later in the essay.

Moving on, risk management as we know it, refers to a form of business planning strategy which concerns itself with identifying, analyzing, and providing a way to deal with risk. Going with the definition,  treasury risk management means identifying, analyzing, and dealing with the risk that poses danger to the treasury of an organization.

Importance of treasury risk management

The importance of treasury risk management dwells in its ability to identify and protect from potential risk to financial holding of an organization. Moreover, there are different operations in a treasury including liquidity, holding capital, credit, and so on. Adding to this, risk management follows a process to help the treasury of an organization avoid potential risk.

Furthermore, a treasury of an organization is quite an important component.  This is because all of the companies holding including the liquid assets. Insurances, financial operations, credits, and so on. All of these financial aspects are important aspects of an organization as a whole.

Key risks in treasury

In this section of the paragraph, we shall discuss the major risks that are faced by a treasury. These risks can be termed treasury risks or financial risks. Moving on, there are different types of financial risk which we will be discussing below. Nevertheless, the key risk in treasury is as follow:

• Liquidity risk
• Price risk
• Credit risk
• Operational risk

Risk management process in Treasury

As we discussed in another sample essay namely, enterprise risk management. Moreover, you can read that sample essay as it is closely related to this sample essay and it will also help you with a better understanding of the concept.

Moving on, the risk management process across its various applications seems to follow a uniform process. This case is no different; i.e. the treasury risk management follows a four-step process to deal with the potential risk to holding of the company.

Moving on, the four-step process of  treasury risk management  are as mentioned below:

• Identification: as the name suggests the first step of managing risks in treasury is identifying the potential risk.
• Analyzing: the second step is the process is analyzing the financial or treasury risk.
• Treating: treating the risk means that providing a solution to the organization to deal with the risk.
• Monitoring: as the name implies monitoring refers to the observation of the aftermath of treating the risk.

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