The FX risk management team at Medtronic envisioned a dream state for balance sheet hedging. The legacy state contained many disparate systems (ERP, TMS, FX risk management platform, FX trading platform) that were not speaking to each other. This resulted in large amounts of time working manually, downloading data from all these systems, uploading to another, and reconciling. The FX risk management team desired a ‘one-stop shop’ where the Medtronic FX risk management platform was fully connected to all the disparate technology systems. The second goal was to eliminate several low value-add, manual processes.
Medtronic reached out to Atlas Risk Advisory who committed to helping put into place a ‘dream state’. New interfaces were built to connect all the relevant treasury systems together via API connections and the implementation of novel advanced straight through processing (STP) logic. Medtronic implemented the risk management platform in an extremely short timeline of just three months.
Best practice and innovation
Several processes, previously manual and high burden, were automated, resulting in a workflow that is as efficient as possible.
Medtronic now logs into the Atlas platform and has immediate visibility into global foreign exchange exposure data across 200 legal entities and 60 currencies. Within a few button- clicks, exposures to hedges are displayed, trade adjustments determined, and sent to the electronic trading platform (FXall). After trades are executed, back-to-back trades are automatically created within AtlasFX, and sent to the (TMS) via a novel two-way connection.
Medtronic achieved its dream state through the implementation of the risk management hub, the interfacing of disparate treasury systems and the rollout of innovative automated processes.
The solution Medtronic implemented moves the company well beyond industry best practice due to the high level of connectivity, automation and simplification.
By implementing this risk management technology, Medtronic now has a one-stop solution for its balance sheet hedging programme. Medtronic has a complex exposure profile, due to its global multinational nature (~200 legal entities that have balances in non-functional currencies across 60 currencies).
“This solution has resulted in us having a risk management state that risk managers dream of. All systems now fully-connect and exposure and hedge data are known immediately, without excessive manual labour,” says Tim Husnik, Treasury Director and FX Team Leader.
The STP created between the three platforms, in combination with automation within the intercompany hedging programme, results in the greatest level of simplification possible. Processes and reports from the systems can be dynamically scheduled. This results in extreme flexibility in monitoring of exposure data. The connectivity between systems and technology platforms enables rapid decision-making related to exposure identification and hedge actions based on Medtronic’s requirements. The new solution significantly improves the efficiency and accuracy of the balance sheet hedging programme performance.
“By partnering with AtlasFX, our dream state was put into place in just three months, cost was reduced by 40% and a complex state was made simple,” concludes Husnik.
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