Functionality of Market Risk Management

Market risk management supports the following tasks within the business management control cycle:

You can establish the current (market) value of all cash flows resulting from your company’s operating business and financial transactions (including any subset thereof) using current market data. You can use various reports to present the results of these valuations to meet your own requirements.

The calculation bases, i.e. market parameters, and the objects of calculations, i.e. financial transactions, which are grouped in evaluation portfolios, are analyzed at a very detailed level. The system then determines the individual values and examines their sensitivities to changing market parameters.

You can calculate the future value of cash flows and financial transactions using market scenarios freely defined by yourself or based on current market data.

The system tells you how the current and future value of real cash flows and financial transactions will react, provided you first create fictitious financial transactions.

IRR sensitivity

The application calculates the sensitivity of the value and yield of cash flows and financial transactions against changing market parameters.

Taking account of specific confidence levels, you determine the potential loss of value of financial transactions when market parameters fluctuate.

exposure analysis

Cash flows resulting from operating business and from financial transactions can be analyzed jointly. The overall exposure, incorporating hedging instruments and their delta equivalents, can be examined. You can generate profit and loss analyses for financial instruments over any time period.

Effective interest rate, IRR

The effects of changing markets on performance figures for currency positions (effective rate) and interest positions (effective interest rate, IRR) are analyzed and can be compared to target or budget figures.



All transactions you conclude with financial instruments are created and documented in TR-TM. The resulting cash flows are transferred automatically to Cash Management and to financial accounting for processing and posting.