About Treasury


About Treasury

Liquidity Risk
Foreign Exchange Risk
Interest Rate Risk


What is Interest Rate Risk Management?

Interest rate risk (IR risk) is the risk of loss due to movements in interest rates. It is directly related to interest paid and received on borrowings and investments, and can be indirectly related to the price of assets and liabilities.IR risk can seriously impact an organisation’s ability to comply with its borrowing covenants – particularly the interest coverage ratio.

As with FX risk, no one can reliably predict interest rate movements. Therefore organisation’s manage their interest rate exposure through the use of interest rate swaps, forward rate agreements and interest rate options. Determining the time frame over which to manage IR risk can be problematic as can determining the optimum mix of fixed and floating interest rates.

We assist clients through:

  • Developing, reviewing and refining IR risk management policies, procedures and systems
  • Developing and reviewing IR risk management strategies
  • Independently valuing IR risk management instruments
  • Developing and reviewing IR risk management benchmarks and performance measurement processes