Managing Risk and Opportunity through Uncertainty

RISK MANAGEMENT OBJECTIVES TREASURY POLICY 55% 68% 25% 12% 12% Forecasted FX- denominated exposures Net monetary FX-denominated assets and liabilities Net investment in foreign operations Earnings translation Contingent risks, including bid-to-award risks or M&A Risk Management Objectives Types of Risks Hedged Frequency of Treasury Policy Reviews To reduce risk to both cash flow and earnings To reduce risk to translated FX earnings in consolidation To reduce risk to transactional cash flows 63% At least annually At least annually and during significant market movement or an M&A transaction Less frequently then once per year Hedging both forecasted and recognized exposures improves our ability to meet strategic objectives.” Americas multinational CTD participant A board-instigated policy review is a priority this year. An important driver is to ensure FX policy is aligned with the firm’s broader risk management objectives.” European Treasurer While FX remains our top concern, a holistic approach to reviewing treasury policies is an essential feature of our process.” Americas Treasurer Treasury Policy Coverage 84% 82% 91% 89% 43% Liquidity risk Interest rate risk FX risk Counterparty/Credit risk Commodity risk 49% 29% 22% 71% 54% 37% 9% While 63% of companies reported reducing earnings volatility as a key risk management objective, the number of corporates that actually directly hedge earnings translation exposures is quite low (12%). 91% of companies surveyed reported having a formal written FX policy in place. 71% of respondents also indicated that policies are reviewed at least annually and/or during significant market movement or M&A transactions. 12 13