Abhishek Sachdev from Vedanta Hedging talks about the growing need for impartial, FSA Authorised advice when it comes to derivative risk management
There is a greater focus on risk management than ever before, yet protection from market risk is equally more complex and interdependent than ever before. Businesses need specialist knowledge, independent advice and analysis, as well as transparency in their interest rate, commodity and foreign exchange derivative risk management.
Abhishek Sachdev, managing director of Vedanta Hedging feels that treasury consultants should not be afraid to let a corporate know if their current strategy is already adequate, rather than suggesting change for the sake of it. In the recent credit-lending downturn, we have also seen the importance of carefully executed treasury documentation, and this is something a consultant should help to manage.
Many organisations feel that commodity and foreign exchange risk are risks that must be left in an unmanageable “black- box”. But with the use of analytical techniques, a treasury consultant will help to show you that you can put effective parameters around these market risks to allow the business to forecast and plan with a greater degree of confidence. Sachdev says “the philosophy at Vedanta Hedging is to shine light into this black-box”.
Abhishek Sachdev, Managing Director
Although the outcomes achieved through using derivatives may appear quite simple, the mechanics and underlying structure of these instruments are often very complex and dense, requiring specialist knowledge to fully take advantage of their benefits.
By using a dedicated FSA Authorised treasury consulting firm, the finance team of a business are left to focus on running the business. They can feel safe in the knowledge that by using an independent consultant, they are acting as an extension to the senior finance team who will consciously consider the overall strategy and aims of the firm.
Indeed, many corporates prefer to allow their treasury consultant to directly deal and negotiate terms and pricing with their bankers. And since the consultant speaks the same technical language, you can feel confident that the relationship is a transparent one – which is often lacking in hedging transactions. This ensures an appropriate risk management strategy is chosen, while protecting the corporate from excessive profits generated by their bank.