The KPMG survey on ‘Managing currency and commodity risks’ delved into the issue of risk culture and philosophy among corporate treasuries. The survey highlighted the fact that although companies today attach greater importance to risk management in financial decision making, the approach still leaves much to be desired. The respondents, comprising of treasury heads and chief financial officers, felt that while appreciation of risk is fairly ingrained at the operating managers and treasurer’s level there was scope for better appreciation of risk at the Board level. Another major finding was that market views still dominate risk management decisions rather than the risk profile and the risk appetite of the organization. A large number of the respondents also felt that that a stronger organizational risk culture would help in improving risk management in the company.
The survey also observes that while the urge to foresee the future and beat the market is high, more and more companies are realizing (and rightly so) that it is better to be prudent and hedge exposures in a structured manner, than to rely on market gurus and their ever changing forecasts.