aracruz2000

The company maintains an overall risk management

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Unformatted text preview: ues on the Company’s financial performance. The Treasury reports to the Chief Financial Officer. The responsibilities of the Treasury includes the proposal of the Company’s corporate risk management policy and its implementation, and the evaluation of the effectiveness of the Company’s overall risk management strategy. The Company may use derivative and non-derivative instruments to implement its overall risk management strategy. However, by using derivative instruments, the Company exposes itself to credit and market risk. Credit risk is the failure of a counterparty to perform under the terms of the derivative contract. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, currency exchange rates, or commodity prices. The Company addresses credit risk by restricting the counterparties to such derivative financial instruments to major financial institutions. Market risk is managed by the Treasury. The Company does not hold or issue financial instruments for trading pur...
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