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Risk Management
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Implementing an Enterprise Risk Management Approach

by Constantinos Tsolakas, Head of Group Treasury Risk Management, ABB

Royal Caribbean's Oasis of the Seas, the largest and most spectacular cruise ship ever built,
driven by an energy-efficient power and propulsion system delivered by ABB.

In recent editions of TMI, we have heard from Brocade (edition 203) and Agrium (edition 204) about the changing ways in which treasury is contributing to the business. In this article, Constantinos Tsolakas describes how ABB’s treasury has evolved to become a strong partner to the business by developing an enterprise risk management approach that has revolutionised the way that risks are prioritised, monitored and mitigated.

Treasury background

The ABB business has changed substantially over the past 10 years, triggered by very challenging business conditions and the subsequent crisis in 2002 (when ABB faced challenging times). Until then, liquidity management was largely decentralised, with a reactive approach to cash management, hedging and financing. Transactions were generally conducted locally, while treasury’s role was predominantly that of a profit centre. Since 2003, we have recognised that liquidity is a corporate asset, and treasury has a major role to play in delivering liquidity and risk management services to the rest of the group.