2011 Corporate Survey Results

Key findings

  • While 73% of treasuries reported that they conducted hedge effectiveness testing, it was seen as one of the biggest challenges for them (27%).
  • While hedge effectiveness continues to represent a major challenge, risk, in particular accurate risk assessment (29%), was also top of mind for Treasurers. 69% of respondents reported taking steps to adjust their risk management strategy and this included running scenarios/sensitivity analysis and calculating Value-at-Risk (VaR). These results were similar to last year's survey.
  • Treasuries use derivatives to better manage their risk, but this year's survey found a decline compared to last year's survey. 75% reported using derivatives in the 2011 survey, compared to 83% of respondents in 2010. For those who are using derivatives, they are making adjustments to their portfolio and performing valuations less frequently than was indicated in the prior survey.
  • The 2011 FINCAD Corporate Finance Survey also showed that treasuries were using counterparty pricing and spreadsheets as the prime methods for valuing their derivatives. Multiple, independent calculations are important to ensure that the valuations are accurate.
  • As a matter of best-practice, corporations should calculate the Credit Value Adjustment (CVA) on all of their OTC derivative transactions. Despite 75% of respondents using OTC derivatives in their portfolio, only 40% felt that they needed to calculate the CVA for their derivatives valuations. Without CVA in their calculation, corporate treasuries face potential adjustments in their books if their auditor's valuations are different from their own.
  • With all of the regulatory changes on the horizon, the majority of corporate treasuries felt that they would need to change the way they are doing business. 51% of respondents anticipated that the impact would be minimal, with minor changes needed, while 30% felt that the impact would be moderate and notable changes would be needed. Only 12% felt that they were well-prepared for regulations that lie ahead.