Balancing Digital Aspirations While Addressing Risk Management Fundamentals: Observations From Citi Treasury Diagnostics

25 FORECASTING CURRENCY EXPOSURE: VARIANCE MEASUREMENT 75% of companies measure forecast variance down to the Business Unit/Legal Entity level. Almost 80% of those that do so, have KPI in place to measure performance. Of the 8% that attempt to measure forecast variance down to the bank account level, 67% do not use KPI. 93% declare an average forecast variance of less than 25% with 42% reporting greater than 90% accuracy in their forecasting. 44%of companies have a forecasting horizon of more than 6months. Measuring Forecast Variance (at lowest level) Business Unit/Legal Entity Currency Bank Account KPIs used to measure/monitor Treasury performance Don’t use KPIs Bank Account Currency 21% 22% 67% Business Unit/ Legal Entity 8% 75% 17% 79% 78% 33% “ We have mobilized a project to support more effective cashflow forecasting. This will allow us to better predict funding requirements and ultimately automate FX and investments trading based on prescriptive analytics.” — European multinational consumer goods company Average Variance vs. Actual 42% 51% 93% 7% 0% — 10% End of Day (1 Day) 10% — 25% End of Week (5/7 Days) End of Quarter (3 Months) 25% — 50% End of Month (30 Days) 6 to 12 Months 6% Cash Forecasting Horizon 9% 22% 19% 44% Forecasting Horizons and Average Variance