Adam Smith Awards 2016 Highly Commended Winner – Best Risk Management Solution
This project’s focus on risk mitigation was a Highly Commended Winner in the Best Risk Management Solution category.
Hilton’s story is noteworthy in the degree of turnaround relative to the original problem. They had a large, complex portfolio of intercompany loans, maintained in multiple databases and without a policy governing associated transactions. It had no comprehensive visibility to aggregate positions or exposures. Hilton had no prospective sense of potential FX risk to earnings or cash flow. Lacking that information, it had no ability to mitigate either risk. Today, Hilton’s intercompany loan portfolio has been reorganised and dramatically simplified.
This webinar was held on Wednesday 8th February 2017.
Read the case study: Best Risk Management Solution
Regarding the various impediments that you detailed about gaining visibility over risk, which of these do you believe was the biggest and most difficult to overcome? (11:40)
Out of all of these various steps that you’ve been taking, which in particular was the most complex and time consuming part of the project and was that what you expected when you began? (17:56)
You mentioned at the end a lot about the common understanding across multiple teams and these rules of the road that you set down, please could you detail the process and perhaps how difficult it was to achieve this and to educate the different teams about what the treasury and company as a whole were trying to achieve through this project? (24:46)
Have you put in place any methods or strategies to manage or reduce your currency backet while operatung across multiple banks and/or systems? (26:16)
You mentioned about the long-term loans there, what are the implications for those loans deemed long-term in nature from a US gap angle? (27:59)
Was support from the CFO needed to push this through tax and accounting or did those teams buy into this quickly after the need for the project was explained? (29:17)
Is it possible to provide an example of activities driving cash flow risk vs earnings risk when Hilton went through the classification process? (31:09)
How effective have your international treasury banks been in helping Hilton achieve efficiencies around managing risk? Which region has been the most challenging? (33:04)
What are the key principals and key learnings from this project? (34:39)
We were already engaged with WSS, but with the understanding that cleaning up the interco portfolio was a key functional concern. Total implementation from approval to final go live was roughly three years, of which roughly two years was from contact signing to finish.