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Policy for corporate risk management
A company's risk policy is a tool for setting targets and practices for market risk management, including responsibilities and reporting. A risk policy ensures that the senior management and the organisation are aware of the preferences of the company's owners and the board of directors and that the owners and the board of directors get up-to-date and relevant information on the company's risks and risk management.
Another important benefit is more efficient decision-making, as all parties will know who is responsible for preparing the decisions and for making the actual decisions as well as what information is used in decision-making.
Nordea's experts support corporate customers in tailoring a suitable risk policy. The policy is determined by using a tried and tested systematic approach and framework covering various aspects, such as:
- identification and measurement of market risks threatening business targets
- determination of risk management targets
- hedging against risks
- responsibilities and decision-making authorisations
- prospective and retrospective reporting
In addition to the content of risk management, a modern policy should take into consideration good governance practices and internal control. A policy concerning market risks - interest rate risk, FX rate risk, commodity price risk - is typically part of a more comprehensive financing policy approved by the board of directors, which lays down the principles of capital management and funding, liquidity risk and credit risk management as well as operational cash flow and liquidity management.
Corporate groups that are using IFRS reporting should also ensure that the terminology used and risk reporting correspond to the disclosures required in annual reports.
Please ask your contact person for further information.