Leveraging Technology to Drive Best Practices in Risk Management

by Cynthia Stimpel, Manager, Financial Risk Management, South African Airways

Increasing sophistication in treasury management technology has led to a major change in the way that corporate treasuries manage their operational and financial risk. At South African Airways (SAA), we strive for continuous improvement across all aspects of our business, including treasury. Because the management of financial and operational risk is a key treasury responsibility, we have invested significantly in effective policies, secure processes and accurate, timely reporting in all risk related areas. This article outlines some of the ways in which we manage operational and financial risk at SAA, leveraging our best-in-class treasury technology infrastructure.

Enforcing segregation of duties

Looking first at operational risk, we have implemented a structured front, middle and back office treasury organisation to enable effective segregation of duties. Our front office dealers take responsibility for execution strategy, dealing and hedging. Our middle office monitors risk, limits and compliance. Back office users manage cash and liquidity, including bank account reconciliation and cash flow forecasting, and manage post-trade activities such as settlement and confirmation.

It is not enough, however, simply to divide responsibilities across different individuals or teams within the treasury department: segregation of duties must also be enforced at a process and systems level. An efficient and secure treasury management system (TMS) is therefore essential to a well-controlled treasury department. We first implemented SunGard’s AvantGard Quantum solution (‘Quantum’) in 2006 based on its ability to support our requirements for straight-through processing (STP) and integrated processing, revaluation, and real-time reporting.

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