Question

Explain why end users, who conduct their risk management operations in the
treasury department, should not require the treasury department to be a profit
center. (10marks)

CAN ANYONE ANSWER THIS PLEASE NEED HELP ITS EMERGENCY

Answer 1

End users should not require, treasury department to be a profit center due to different reasons. The first reason is the conflict of interest that comes when the treasury department becomes a profit center. If it is the case, then people at treasury department will give attention to those aspects, assumptions and activities that can bring more profit under the name of the treasury department. It makes the who objective of risk management operations to be compromised and risk management is not done properly. The second reason is that if the treasury department becomes a profit center, then its decisions regarding risk assessment and risk management can be influenced with ease by the third parties. It will harm the interests of other stakeholders such as public, investors and regulatory agencies as outcomes of risk management by treasury may not be 100% genuine. The third reason is to remove any pressure that comes to the risk analysts at treasury if treasury department is made to be a profit center. If Treasury department is not a profit center, then risk management operations will be more neutral and appropriate for the end users.