In the fast-paced world of finance, organizations are in need of innovative solutions that exist to streamline their treasury and risk management processes, ensuring optimal control over their financial operations across teams, departments, and company locations.

Enter SAP Treasury and Risk Management (SAP TRM) — a cutting-edge software suite that revolutionizes the way businesses manage their cash, investments, and exposure to financial risks.

With its comprehensive functionalities and seamless integration with existing SAP systems, SAP TRM has become the go-to solution for businesses looking to manage market data more efficiently, elevate their financial prowess, and achieve superior risk management.

This article will discuss the key components and capabilities of the SAP Treasury and Risk Management solution and how it can help improve efficiencies for financial institutions, as well as where our team of expert SAP consultants can come in to help. Read on to learn more!

What is SAP TRM?

SAP TRM (Treasury and Risk Management) is an application designed to help companies integrate treasury management with core business processes, ensure financial transactions are aligned with accounting principles, and leverage real-time analytics to make more informed decisions over time.

With the SAP Treasury and Risk Management solution, companies are enabled to:

  • Deploy SAP applications in both on-premise and hybrid environments
  • Assess and manage financial risks for improved financial performance
  • Seamlessly integrate with core data management processes across systems
  • Access real-time analytics and advanced tools for improved data visibility
  • Provide comprehensive support for treasury workflows
  • Optimize risk management processes to improve financial efficiencies

Understanding the Need for Treasury and Risk Management

The Treasury and Risk Management solution makes it easier for companies across industries to improve the efficiency of their liquidity and cash management initiatives, helping to mitigate financial risks and improve the accuracy of financial forecasts across the board.

The SAP TRM application offers a few key benefits for users, including:

  • Efficiency and effectiveness: Automate core business processes and promote collaboration between users and teams to increase productivity and focus important resources on more high-value tasks.
  • Cloud-based infrastructure: Easily deploy SAP TRM in cloud-based environments to access new features and enhancements in treasury management and eliminate the need for costly on-premise deployments or upgrades.
  • Seamlessly integrated solution: Leverage built-in integrations with other SAP systems, like SAP S/4HANA, to connect core business processes to treasury, cash, and liquidity management workflows.

Components of the TRM Module in SAP

Let’s take a look at the key components of the SAP TRM module:

Market Risk Analyzer

The market risk analyzer component helps companies effectively identify and manage market risks and secure a competitive position in the market over time. This, along with traditional financial management tasks like liquidity assurance and cash forecasting, makes it easier to conduct extensive position evaluations, calculate risks across the market, and create reports for better marker risk control.

With the market risk analyzer tool, companies can also facilitate more efficient data retrieval, mark-to-market valuations, position analysis, currency exposure management, and simulated transactions for better analysis and management of important financial data.

Credit Risk Analyzer

This component in SAP TRM enables companies to measure, analyze, and control counterparty default risk, meaning any potential losses from financial transactions in which business partners do not hold up their end of the bargain, due to economic, political, or other reasons.

This way, companies can limit risks associated with financial transactions, control them by setting flexible limits, and leverage extensive reporting capabilities to monitor risks over time.

Transaction Manager

The transaction manager component makes it easier to improve financial transaction and position management, including both front and back office transactions and connections with the SAP Financial Accounting application.

This tool also helps customers automate core business processes and leverage advanced evaluation structures and flexible reporting tools to analyze current and future financial positions, transactions, and portfolios. And, with seamless connection between the transaction manager and SAP TRM, companies can accurately and efficiently manage the effects of all financial transactions on interest rate or liquidity risks.

Key Features of SAP Treasury and Risk Management

Here are the main features included in the SAP TRM module:

1) Financial Risk Management

The SAP TRM solution simplifies compliance with financial regulatory requirements, like EMIR, GAAP, and IFRS 9, by providing a full audit trail and comprehensive financial management features. With this, companies can more accurately monitor financial risk positions and track currency conversion rates, making it easier to maintain compliance and stay up-to-date with changes across the finance industry.

2) Investment Management

With better insights into cash availability, balance risk, and return, SAP TRM helps companies automate core debt and investment management processes and ensure competitive interest rates on shorter-term debt financing. The TRM module makes it easier for customers to monitor all debts and investments, protect against financial risk, and improve return on investment (ROI) over time.

3) Machine Learning and App Extension Tools

SAP TRM offers machine learning (ML) capabilities and app extension tools to extend and integrate treasury and risk management processes with both SAP and partner-supported applications on the SAP Extension Suite. These integration capabilities allow users to connect TRM functionality with SAP Data Intelligence, SAP Market Rates Management, SAP Business Integrity Screening, and more.

Role of SAP TRM in Hedge Management

The Treasury and Risk Management (TRM) solution offers advanced tools designed to help customers conduct valuations of financial transactions, calculate risk, and evaluate market data scenarios. Here are the two hedge management solutions available in the application:

Hedge Management and Accounting of Net Open Exposures

The Hedge Management and Accounting of Net Open Exposures (FX Risk) solution enables companies to execute their hedge accounting policies more effectively and manage the risk of planned cash flows in future financial periods.

With this solution, companies can report foreign exchange exposures managed in the Exposure Management and Cash Management applications and makes it easier to access, view, and leverage the financial instruments used to mitigate risks across the board.

It also allows customers to report on hedging instruments (hedges) that are managed in the transaction management area of Treasury and Risk Management, enabling them to make better decisions about hedging activities in the future.

Hedge Management of Balance Sheet FX Risk

The Hedge Management of Balance Sheet FX Risk solution simplifies the management of risks that come from the reevaluation of monetary balance sheet items associated with foreign currency.

It provides a mobile app that makes it easier to analyze balance sheet entries, view balance sheet exposures and their hedges, and access hedging instruments used to mitigate specific risks.

Core Integrations with the SAP TRM Solution

The SAP TRM solution comes with pre-built integrations with other SAP and non-SAP systems, including:

Financial Accounting

The Treasury and Risk Management solution is responsible for managing financial transactions and generating positing in SAP S/4HANA, and then transferring them to the Financial Accounting solution in the on-premise system.

Integrations with the Financial Accounting module also allow customers to generate and pay payment requests initiated in the SAP TRM solution, making it easier to manage and transfer accounting documents between applications in the SAP S/4HANA system.

External Trading Platforms

The SAP External Trading Platform Integration solution helps companies connect operations in their SAP S/4HANA Cloud to external trading platforms, supporting the creation of trade requests and the optimization of core financial business processes across systems.

This way, trades can be closed on an external trading platform and automatically transferred through the integration platform to be managed in the SAP Treasury and Risk Management system.

Market Rates Management

With integration with the Market Rates Management application, users are enabled to consolidate and connect current and historical market data into financial transactions in SAP TRM.

SWIFT Network

Enabled using SAP Multi-Bank Connectivity for communication with the SWIFT infrastructure, this integration makes it easier for users to send and receive treasury communications for FX and money market transactions across systems.

Where Does Surety Systems Come in to Help?

Whether you need help implementing new SAP applications for the first time, additional support optimizing business processes related to financial assets and transactions, or just an extra hand keeping track of financial supply chain management and analysis initiatives, Surety Systems is here to help.

Our team of senior-level, US-based SAP consultants has the skills and experience you need to take your SAP solutions to the next level. From implementations to integrations, upgrades, and everything in between, our SAP consultants are guaranteed to provide the support your team needs, no matter what.

Getting Started with Us

Wherever your SAP project needs lie, our team of expert consultants has what it takes to handle it all!

Interested in learning more about the key capabilities of SAP Treasury and Risk Management and how the solution can help optimize financial transactions? Ready to get started on a project with our SAP team?

Contact us today for more information!