Risk Management

Real-time risk management from a single vantage point

  • The Challenge

    Without real-time risk management, many large organizations find themselves with considerable exposure to currency volatility and commodity price risk up and down their supply chain. For these firms, it’s a major challenge to optimize hedging activities when their key information is spread across multiple systems and channeled through operational silos that don’t communicate effectively. In today’s markets, companies can uncover significant opportunities across their business by managing these risks on a single, actionable platform.

    The Opportunity

    The opportunity for improved profits lies within the operations of the business itself  within the chance to create a single resource including all relevant data, by breaking down silos within the organization, and through applying and sharing deep expertise up and down the enterprise.

  • The Openlink Solution

    Openlink delivers – on a single platform - a critical, consolidated view of enterprise-wide commodity and currency risk exposure. Organizations can now make rapid, smart decisions in response to market fluctuations with the visibility necessary to perform effective financial commodity hedging. Leaders are empowered with the insight required to reduce operational risk, manage input price and currency volatility, and improve company cash flow and profitability.

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    • Get an aggregated physical-to-financial view of positions and risk in a single system

      Challenge

      Companies could benefit from having a singular view of positions across both physical transactions and financial derivatives used in hedging. However, these trades and transactions are often processed in a separate system. As a result, data must be extracted from each system for off-system manual calculations, in order to determine mark-to-market or price risk exposure.

      Solution

      Openlink collects and combines information automatically for straight-through processing with programmable, automated tasks that coordinate both physical transactions and financial derivatives used in hedging.

    • Measure hedge effectiveness and minimize earnings volatility

      Challenge

      Regulatory changes impact hedge accounting. And in order to avoid earnings volatility, hedges that qualify as “highly effective” can be afforded hedge accounting treatment. However to implement hedge accounting requires a large amount of work documenting the hedge relationship and proving – both prospectively and retrospectively – that the hedge relationship is effective. Additionally, evolving regulations and accounting standards (e.g. IFRS 9) for measuring hedge effectiveness make it more difficult to keep systems current with the latest rules and methodologies.

      Solution

      The Openlink solution analyzes the effectiveness of hedges (under IFRS 9, IAS39 or FAS 133), invokes the appropriate hedge accounting rules and automates accounting entries. If a particular hedge is later deemed ‘ineffective' the hedge accounting treatment is automatically withdrawn. This solution supports document generation and statutory reporting required by law for hedge accounting.

    • Get complete trade and market variable analysis prior to making the trade

      Challenge

      Financial firms are paying greater attention to stress testing; modeling hypothetical scenarios of positions to evaluate the impact of possible future events. And they’re looking to model increasingly complex scenarios to better understand their liquidity, credit and market risks across a much wider range of circumstances and situations.

      Solution

      With Openlink's "Scenario Simulator" both Hedge Analytics and Value at Risk can be seen at a glance.

      Openlink provides native hedge accounting capabilities including automated hedge effectiveness analytics and reporting – giving you the reassurance that earnings statements are being correctly reported.

      Additionally, portfolio re-valuation and value-at-risk calculations can be evaluated in real time, allowing smarter decisions to be made more quickly than in the past.

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