Mitigating Financial Risk
EY CAFTA Case Study 2023
Mitigating Financial Risk CAFTA
Finance with finesse
Dear participant,
We are extremely excited to welcome you to the EY CAFTA Case Championship 2023!
EY CAFTA Case study championship is the by-product of a strong conviction of EY’s financial
upskilling mission. It aims to give students an opportunity to hone their skills in business and
consulting, be innovative and analytical about solving the every-day complex business problem
statements and showcase their skills to the wide network of industry experts.
This is your opportunity to sharpen and prove your skills to the esteemed panel of carefully selected
judges from industry, acquire unique industry insight through mentorship sessions from the
consulting experts and present your solution to the most impactful audience.
What we are looking for are leaders for tomorrow by reviewing talents of today!
Prerequisite: Before starting the below stated case study, we hope you have thoroughly brushed
yourself with the CAFTA videos and modules shared with you for the relevant stream you had applied
for.
This case study revolves around “Mitigating Financial Risk” focusing on the risk of possible losses in
positions arising from movement in market prices. The problem statement of the Corporate in
question would revolve around the risk of losses due to adverse movement in market prices such as
interest rate, exchange rate, equity prices, or commodity prices. You will be required to define,
measure and monitor market risk across various asset classes and products for the Corporate.
Your final submission must be submitted by 14th October. It is also mandatory for you to submit any
additional working/coding script/dashboard/excel worksheet as annexures to the case study
solution.
(The format of submitting the case study solution will be communicated with you shortly in a separate
thread.)
We wish you all the best and look forward to your submissions!
Mitigating Financial Risk CAFTA
Finance with finesse
Rules and Regulations
An overall spirit of sportsmanship is expected from all participants throughout the duration
of the competition
Any violation of the rules may result in disqualification of the team. Any decision of
disqualification is final.
Only one solution can be submitted per participant / team
Please adhere to the deadlines. No extension will be given.
The submissions are final, and no modifications are allowed post submission
Feel free to use all resources available to you in order to research and develop the solution
to the problem statements.
All work submitted must represent the your / team's own words, ideas, and work. Using public
material is allowed, but you are required to cite the sources. Failure to cite sources will be
considered plagiarism and will be liable for disqualification
Mitigating Financial Risk CAFTA
Finance with finesse
Background
Sacco Ltd is a Fortune 500 company engaged in the production and distribution of industrial
machinery. With operations in multiple countries, the company generates substantial revenue and
faces significant financial exposures. The company has experienced rapid growth in recent years and
is planning to expand into international markets. However, this expansion poses several financial
risks that need to be carefully assessed and mitigated.
You are the Head treasurer of the company, managing the treasury and related financial risk of Sacco
Limited.
Extracts from the board meeting
In the recent board meeting, the board members were discussing the possible financial risks that
Sacco Ltd could face considering the expansion.
Board member 01: Sacco plans to expand its operations into four new countries within the next year.
These countries are known for their emerging markets and offer significant growth potential.
However, each country has its unique economic and regulatory landscape, presenting various
financial risks to Sacco Ltd. What are the measures that we have started to take to address these
risks?
You: We are conducting a comprehensive risk assessment to identify potential risks that could affect
our company because of the expansion. In recent years, our company has continually enhanced its
existing risk mitigation strategies given the increased volatility in financial markets, uncertainty in
trade policies, and disruptions caused by global events. These factors heightened the company's
exposure to various financial risks and as a result, we have substantially modified our existing risk
mitigation strategies.
Board member 01: To what extent will our existing strategies be modified considering the expansion?
You: Significantly. We have appointed Granger Consultancy as our risk consultants to advise us on
our existing strategies and the strategies that we will have to adopt for the expansion.
Board member 02: That’s great. We would request your team to present a comprehensive financial
risk mitigation strategy memo for our review.
You: Definitely, we will have the memo ready. Thank you.
Mitigating Financial Risk CAFTA
Finance with finesse
Case Study Questions: Basis the above scenario understanding, answer the below mentioned
questions.
A. For Sacco Limited, please elaborate on the financial risk mitigation strategies that the Treasurer
should adopt considering the expansion in four countries?
B. Draft an illustrative Risk Management Policy for Sacco Limited.
C. What is the role of technology to mitigate financial risk and drive business performance?
D. Elaborate on the qualitative and quantitative benefits of implementing the risk mitigation
strategies as per case study question “A” above.
Mitigating Financial Risk CAFTA
Finance with finesse
