2024 Alexander Hamilton Awards: Financial Risk Management

As the speed of change in the external business environment continues to accelerate, companies with exposure to foreign currencies need to be increasingly thoughtful and strategic about managing those risks. All three of this year’s Alexander Hamilton Award winners in the category Financial Risk Management undertook successful initiatives to more efficiently understand—and more effectively mitigate—foreign exchange (FX) risk in their organization.

• Gold Award:  After an acquisition that nearly doubled the size of its business, biopharmaceutical giant Bristol Myers Squibb (BMS) needed to deploy more sophisticated systems and processes for financial risk management. The combined company launched an initiative that boosted visibility and control across several key areas: balance sheet and cash flow FX hedging, counterparty risk management, and mitigation of the financial risk inherent in the company’s non-qualified deferred compensation (NQDC) benefit plan.
• Silver Award:  When GE HealthCare (GEHC) spun off from General Electric, the treasury team had less than a year to build out a treasury function optimized to meet the needs of its business. Because GEHC operates in 160 countries, currency risk management was a serious concern. The treasury team developed a many-to-one approach to hedging that maximizes natural hedges within the company and places external hedges only when necessary.
• Bronze Award: At Hitachi, one of the world’s largest conglomerates, different business units and group companies used to manage their own FX risk independently. This led to more external transactions than the company needed and limited corporate treasury’s visibility into currency risk. Hitachi undertook a major initiative to centralize FX exposure data, optimize natural currency offsets, hedge remaining exposures through streamlined processes, and manage counterparty risk at the corporate level.

All three initiatives were complex and time-consuming—but worth the effort. “Implementing these new systems and processes took a lot of effort,” says Ashish Saraogi, senior director of benefit investments and international treasury at BMS. “But every project that we completed freed up more of our time, so the investment was worthwhile. We are a leaner team than we were a few years ago, and yet we are getting more done.”His colleague, BMS assistant treasurer Keith Gaub, adds, “This creates more time for strategic work, such as looking at the portfolio’s mark to markets and seeing whether there are restructuring opportunities, or reconsidering more broadly how we layer our future FX trades. Rather than being limited to exclusively hedging the exposures, we can focus on analyzing and challenging the way we work to deliver maximum value for the enterprise.”Congratulations to these highly innovative—and award-winning—organizations! And thank you to the judges of our 2024 awards program: Jean-Francois Heitz, former deputy CFO and treasurer of Microsoft; Erik Smolders, former treasurer of Ingram Micro and a vice president in Deloitte’s Global Treasury Advisory Services practice; Craig Jeffery, managing partner of Strategic Treasurer; Paul Galloway, senior adviser at Strategic Treasurer; and Marie Hollein, former president and CEO of Financial Executives International.Finally, thank you very much to ION Treasury and TIS for sponsoring the 2024 awards program.You can learn more about our 2024 awards program here. Treasury & Risk will present the remaining 2024 Alexander Hamilton Awards through the end of the year.