Treasury and Risk Management: Issues, Challenges, and Global Trends

This report examines treasury and risk management within the banking sector, focusing on the treasury department's crucial role in balancing and managing daily cash flow and liquidity. It explores key issues such as financial risk management, debt and liability management, and the oversight of banking relationships. The report delves into the challenges faced by financial institutions, including credit extension, trade wars, and technological advancements. It also analyzes the risks associated with interest rate stability, economic conditions, and technological issues like mobile applications and hacking. Furthermore, the report discusses global trends affecting treasury management, such as technological integration, political reforms (like Brexit), and the increasing use of cashless transactions. The conclusion suggests measures for banks to mitigate these challenges, emphasizing the importance of workforce expertise and technological security. The report utilizes various references to support its findings.

Running head: TREASURY AND RISK MANAGEMENT
TREASURY AND RISK MANAGEMENT
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Introduction
The major function of department of treasury within the bank relates to the balancing and
the management of the cash flow within the bank on a daily basis. The functions of the treasury
department further include the management of the liquidity of the funds that the bank has been
working on every day. Jones (2016) states that the treasury department of a bank is also involved
in the handling of the various investments that are undertaken by the bank in terms of the foreign
exchange, securities, the management of the liabilities and the assets of the financial organization
as well as the handling of the various cash instruments that are required for the seamless
performance of the bank in the given market.
The following paper attempts a discussion on the various barriers that the banks face in
the management of the treasury. The paper opens with the discussion on the key issues that are
faced by the bank in terms of the treasury management. The paper proceeds to shed light on the
major challenges and risks that are presented in the management of the treasury department
within the bank. The paper nears a conclusion with the discussion on the global trends that affect
the management of the treasury department.
Key Issues
The multitude of financial organizations that are active within the international markets
tend to face a number of issues in the management of the treasury department that is existent
within the given financial organizations. The major issue highlighted in the treasury management
refers management of the financial risks that are faced by the banks. The banks also face certain
issues in the management of the debts and the liquidity that is required for the development of
the bank in its entirety (Page, 2017). The banks also face issues in the management and the

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maintenance of the issues that stem from the overseeing of the activities of the relationships
within the banking industry.
The management of the financial risks within the banking industry refers to the
management of the flow of cash towards and from the clientele. The negligence in the
management of the cash flow might result in the conditions wherein the organization might face
a loss. The banks should be capable of the proper management of the various devices and
instruments that are necessary for the betterment of the overall performance of the financial
institution in discussion. The other issues that the banks face refer to the issues in the
management of the debts and the liabilities of the bank. The financial organizations that are
active within the international markets should maintain proper management of the debts and the
liabilities that are presented in the give markets (Bessis, 2015). The major issues that arise due to
the ill-maintenance of the debts and the liabilities might relate to the unsure conditions of
funding from the banks thereby leading to the loss of revenue as well. These issues might be
dealt with through the implementation of the Basel III guidelines that help in the development of
the strategies for the management of the financial system active internationally.
Challenges
The financial institutions might also face a number of challenges in their daily activities
of serving the clientele as well as giving in to the demands of the staff in order to maintain a
lower attrition rate within the company. The major challenges that are faced by the financial
organizations refer to the various issues like the extension of credit to the clientele. This might
affect the operations of the concerned financial institution in the given markets as well
(Roszkowska & Prorokowski, 2017). The banks that have been involved in the finding of the
international trading activities might face issues due to the implementation of the trade wars that

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are waged among the countries. The implementation of the trade wars within the countries leads
to the financial conditions incurring the losses (Bradsher & Swanson, 2019). The intensification
of the trade conflicts between the economies within the world are known to have been affecting
the decrease in the sales volume within the economies. This in turn leads to the worsening of the
prospects of the various financial institutions that had been influencing the trade activities within
the concerned economies. This might further lead to the loss of the revenue that the financial
institutions could have earned through the development of the trade relations within the
concerned economies. A major example that can be cited in this case is the example in the case
of the trade war that has been existent within the United States and the Chinese government. This
has affected the prospects of the banks like the Standard Chartered Plc and the HSBC Holdings
Plc (Liu & Cadman, 2018).
Risks
The financial institutions that are active within the international markets face a huge
number of risks. The financial organizations face huge risks due to the stability of the interest
rates that are presented within the given markets. The banks that are presented within the given
markets face the risks due to the issues like the economic conditions that are faced by the
countries. The major risks that are faced by the financial institutions in the present days stem
from the technological aspects that are presented within the given organizational operations
(Cadamagnani, Harimohan & Tangri, 2015). The major technological issues that are presented in
the operations of the company relate to the issues that are faced due to the development of the
various mobile applications. The clientele of the banking organizations tends to use the mobile
applications that are formulated by the concerned experts (Mager, 2019). The implementation of
the applications by the clientele might lead to major technological issues due to the various

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glitches that might occur at the given times. The other technological issues that are faced by the
financial organizations refer to the issues that are presented due to the hacking that have been
taking place all over the world. The hacking activities that take place within the given market
tend to deal with the issues within the organization affect the clients as well as the employees of
the organization (Okere, 2017). The hacking activities that have been presented towards the
organization might lead to the criminal activities that affect the clientele as well as the employees
of the organization. The activities of hacking further lead to the dislocation and loss of the funds
that are maintained by the organization on behalf of the clientele of the organization (Robertson,
2015). This loss of funds might further lead to the disruption of the of the operational balance
within the organization as well as the market wherein the company has been operating.
Global trends
The major global trends that have been affecting financial organizations all over the
world refer to the incorporation of the technological advancements within the operations of the
organization, the major political changes and reforms that have been taking place within the
international markets and the access to the banking facilities with the help of the technological
apparatus even after the banking hours. The banking facilities and the involvement of the
banking organizations with the other business firms have been observed to be highly influenced
by the political reforms that have been taking place within the organizations (Ozaee & Sohrabi,
2017). The treasury management within the financial organizations are highly affected by the
implementation of the political reforms like the formation of Brexit and the separation of the UK
economy from the EU. The implementation of this reform might lead to the conditions wherein
the financial institutions would have to undertake the cross-border transactions in order to
provide the uninterrupted service to the concerned clientele who have been situated at the Brexit

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(Lannoo, 2017). The technological advancements that have been implemented in the present-day
banking activities tend to ease the operations of the bank by allowing the clients to transact even
outside the banking hours. The majority of the transactions that are accomplished by the clientele
in the modern times refer to the various modes of the cashless transactions. This has led to
various benefits as well as losses for the financial institutions. The implementation of the
cashless modes of transaction aim at helping the clients to get rid of the hassles of the
conventional banking methods (Chaaya & Anderson, 2017). However, the implementation of the
technological advancements within the banking organizations might lead to the increase in the
unethical practices of hacking and money laundering thereby leading the clients to face huge
issues with the funds that they have been saving at the banks.
Conclusion
In order to resolve the issues that are faced by the banks in the present days, the
concerned organizations might be advised to follow certain measures. The banks should employ
the members within the workforce to deal with the mitigation of the issues that are presented due
to the implementation of the debts and the liabilities of the bank as well as the liquidation of the
assets of the bank. The banks might further be advised to implement the measures that are
required in order to deal with the technological issues that are presented due to the
implementation of the unethical practices like hacking and money laundering. Thus, in
conclusion it might be stated that the implementation of the recommended measures might help
in the overall development of the financial organizations in the given market.

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References
Bessis, J. (2015). Risk management in banking. John Wiley & Sons.
Bradsher, K., & Swanson, A. (2019). Trump’s Trade War Threat Poses Problems for China and
Investors. Retrieved from https://www.nytimes.com/2019/05/06/business/china-trump-
trade-economy-markets.html
Cadamagnani, F., Harimohan, R., & Tangri, K. (2015). A bank within a bank: how a commercial
bank's treasury function affects the interest rates set for loans and deposits. Bank of
England Quarterly Bulletin, Q2.
Chaaya, M., & Anderson, P. (2017). Regulatory reform agenda: What does it mean for the
banks?. Governance Directions, 69(4), 228.
Jones, P. A. (2016). British credit unions: transformation and challenge. In Credit Cooperative
Institutions in European Countries (pp. 233-249). Springer, Cham.
Lannoo, K. (2017). Brexit and the Asset Management Industry. ECMI Policy Brief, (23/17).
Liu, A., & Cadman, E. (2018). Banks Are Facing a Squeeze From Trump's Trade War. Retrieved
from https://www.bloomberg.com/news/articles/2018-07-15/banks-funding-9-trillion-
face-squeeze-from-trump-s-trade-war
Mager, C. (2019). Innovation in transaction banking: What can emerging technologies
deliver?. Journal of Payments Strategy & Systems, 13(1), 66-71.
Okere, W. (2017). Treasury Management Policy and Improvement in Revenue Base in
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