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Cash management tops the Treasury Operation survey by the ACT and Ernst & Young

Cash and liquidity management is considered the highest responsibility of the corporate treasury, followed by funding and interest rate risk management, according to a recent survey carried out by the Association of Corporate Treasurers (ACT) and Ernst & Young's financial services risk management practice. That's a change from 2003 results, when FX risk management was the top priority.

Interest rate risk has moved up the treasury agenda and, while still largely managed on a fixed-floating basis, 2004 has witnessed a change away from the traditional fifty-fifty split. This may be caused by treasury taking a more strategic view on interest rates.

?Just over half of respondents manage interest exposure from debt and investments on a net basis, and only one respondent considers interest rate risk within the pension liability,? notes the survey. ?As more pension liabilities are bought on balance sheet, managing the pension liability interest rate risk may become more prevalent.?

The main highlights from the Treasury Operation survey are:

  • The majority of treasuries have a separate front and back office, an increase on last year.

  • Of those with a separate back office, the back office is most likely to report to another department in finance, rather than treasury.

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