The main role of for the treasury department in any company or business is managing the companys funds.

Treasury department manage financial risks by understanding businesses areas and having a good relationships with all financial intermediaries to obtain their support when needed. The risks that treasury department can control and eliminate are many, some of these risks are: 1. Liquidity risk: treasury department has to control funds in a way that the company will not be out of cash in a way that will stop or affect its operations. 2. Credit risk: treasury department has to make sure that all customers will pay their liabilities on time, also thy have to make sure that all services received from the financial intermediaries are working as expected and are covering their required job. 3. Currency Risk: this risk occurs from foreign relationships, when a company sells its products or services to a customer in a foreign country, or by a product or service from a supplier that is located in a foreign country, it will face translation risk; this occurs because of converting the amount from one currency to another. Also when a company purchases assets in foreign countries it will face the same risk. 4. Interest rate risk: this risk occurs when companies borrow to support its operations. Having a good relationship with the financial intermediaries allows the company to get the best interest rate when obtaining any service from them. If a company do not pay back their loans and interests on time they will have liquidity problems and integrity issues; this where the good relationship with financial intermediaries become beneficiary to the company as it could facilitate new services and products to help the company. 5. Operational risk: this is an internal risk; it is due to weak management and insufficient control. (www.afponline.org, 2003). When treasury department is putting its decisions and managing its assignments and tasks, it put into consideration all the required services and facilities that it needs, and in the same time it connect these services and facilities with the most suitable financial intermediary the will also provide it with the best option and in the lowest risk. By building this relationship with the financial intermediary, the treasury department will be assured that all the companys obligations and liabilities will be covered if the company became in a situation that it cannot fulfill its obligations. The risk will be there but it will be eliminated and controlled in a better way.

References:

Ranham. (2009) Perspectives on Managing Risk. Available from: http://www.zurichna.com/internet/zna/SiteCollectionDocuments/en/claims/WallStreetJournal PerspectivesonManagingRisk.pdf (Accessed: 26 Jan 2011). www.afponline.org. (2003) THE EVOLVING ROLE OF TREASURY. Available from: http://www.afponline.org/pub/pdf/AFPTreasury_%2520Survey.pdf (Accessed: 25 Jan 2011). www.sbp.org.pk. (n.d.) Risk Management: Guidelines for Commercial Banks & DFIs. Available from: http://www.sbp.org.pk/riskmgm.pdf (Accessed: 26 Jan 2011).