Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - (Page 16)
LA PAROLE AUX ANNONCEURS IFRS 7, 7TH HEAVEN FOR INVESTORS OR MORE HELL FOR CORPORATES PART II: CREDIT RISK REPORTING UNDER IFRS 7 BY JIRO OKOCHI, CEO & CO-FOUNDER, REVAL.COM, INC. BACKGROUND Effective January 1, 2007, but with a full comparables requirement making it necessary to get started now, companies complying under International Financial Reporting Standards (“IFRS”) have been saddled with yet qualitative and quantitative reporting requirements, that should allow Jiro Okochi shareholders more transparency for how companies measure and manage market risk (interest rate, foreign exchange, equity, commodities, prepayment, etc.), credit risk and liquidity risk associated with financial instruments that it holds. Unfortunately there is not much guidance or benchmarking information and so the corporate community is left to wait for some to early adopt and lead the way, which doesn’t leave them much time to follow and catch up. Perhaps the two most significant changes that will impact corporations are the sensitivity analysis requirements for quantitative disclosures and the overall impact for corporations to understand their credit exposures across all financial instruments. This document will focus on credit risk reporting issues, please see Part I: Sensitivity Analysis For Market Risk for further information. CREDIT RISK UNDER EVERY ROCK While the concept of credit risk is commonly understood by finance professionals, its another matter to measure and monitor the quality of credit exposure across all assets and liabilities of a corporation. Credit products from bank loans, public debt, mortgages, ABS, credit default swaps and other fixed income instruments are priced around credit and while not always simple to model and price, are easily identifiable in terms of having credit risk. So its one thing if you are a financial institution that has to live and breathe understanding credit risk in order to be profitable and its another if you are a mid size corporation making widgets and are worried about inventory turns. The general mentality for most corporations is tied to being concerned about their own credit spread in order to manage liabilities and liquidity, not to really look at their own exposure to counterparties like derivative dealers or customers and suppliers. For example in the table above, if Company ABC has a 100 million dollar loan with Bank XYZ, while Bank XYZ has 100 million dollar exposure to the Company ABC, Company ABC has zero credit exposure to Bank XYZ. If Company ABC entered into derivative transactions with Bank XYZ it would take a significant volume of derivatives or a significant move in the market to move 100 million Euros in Company ABC’s favor (i.e. where it now has credit exposure if Bank ABC were to go under). The simplified example above shows that for the single swap, the market would have to move 2222% before the swap mark to market would get to the $100mm exposure of the loan. If the corporate is a more active user of derivatives it typically would have more banks, so this is not just a small company situation. This is the reason most corporates do not bother to measure credit risk to banks. Corporations also typically do not measure the credit risk associated with account receiveables as the working capital and cash flow projections out weigh the importance of monitoring if each counterparty will pay. Its more “when will they pay” not “will they pay” foundation that companies have with clients who buy their products. If corportations do monitor credit risk it’s typi- Le Magazine du Trésorier - N° 57
Table des matières de la publication Le Magazine du Trésorier - n°57 - 1er trimestre 2007
LA PAROLE À ... : M. JACQUES GALLOY
LA PAROLE AUX ANNONCEURS
INTERNET
SOMMAIRE
BRÈVES
VIE DE L’ASSOCIATION
DOSSIER : ASSET Management pour une meilleure gestion du cash
EDITORIAL
EACT
Le Magazine du Trésorier - n°57 - 1er trimestre 2007
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - (Page Couverture)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - SOMMAIRE (Page 1)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - SOMMAIRE (Page 2)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - EDITORIAL (Page 3)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - EDITORIAL (Page 4)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - EDITORIAL (Page 5)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE À ... : M. JACQUES GALLOY (Page 6)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE À ... : M. JACQUES GALLOY (Page 7)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE À ... : M. JACQUES GALLOY (Page 8)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - DOSSIER : ASSET Management pour une meilleure gestion du cash (Page 9)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - DOSSIER : ASSET Management pour une meilleure gestion du cash (Page 10)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - DOSSIER : ASSET Management pour une meilleure gestion du cash (Page 11)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - DOSSIER : ASSET Management pour une meilleure gestion du cash (Page 12)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - DOSSIER : ASSET Management pour une meilleure gestion du cash (Page 13)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - DOSSIER : ASSET Management pour une meilleure gestion du cash (Page 14)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - DOSSIER : ASSET Management pour une meilleure gestion du cash (Page 15)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE AUX ANNONCEURS (Page 16)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE AUX ANNONCEURS (Page 17)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE AUX ANNONCEURS (Page 18)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE AUX ANNONCEURS (Page 19)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE AUX ANNONCEURS (Page 20)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - LA PAROLE AUX ANNONCEURS (Page 21)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - VIE DE L’ASSOCIATION (Page 22)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - EACT (Page 23)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - BRÈVES (Page 24)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - BRÈVES (Page 25)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - BRÈVES (Page 26)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - INTERNET (Page 27)
Le Magazine du Trésorier - n°57 - 1er trimestre 2007 - INTERNET (Page 28)
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