Risk and centralisation

In this lesson

1. 0:00 Treasury risk mitigation strategies
2. 0:16 Currency risk hedging techniques
3. 0:45 Interest rate risk management
4. 2:42 Centralised versus decentralised treasury
5. 3:01 Advantages of centralised treasury
6. 4:10 Disadvantages of centralised treasury

About this lesson

You'll discover practical techniques for mitigating currency and interest rate risks—including derivatives like forwards, futures, options, and interest rate swaps—and understand how netting and duration management protect organisations from market volatility. This content is essential for P3 Risk Management and helps you grasp how centralised treasuries streamline processes and reduce costs, while decentralised structures offer local market responsiveness and faster decision-making. The lesson examines the core trade-offs in treasury organisation. A centralised function delivers uniform policies, better financial control, cost savings through consolidated resources, and stronger negotiating power with lenders. However, centralisation can create coordination challenges across multiple locations and slow response times compared to local expertise. By understanding these advantages and disadvantages, you'll be equipped to evaluate treasury structure decisions and recognise how organisational design directly impacts financial risk management and operational efficiency.

Duration: 5m