in a Dynamic Environment - Domain-b

Annual Report 2008-09 The Company has used various types offoreign currency forward and optionscontracts to hedge the risks associatedwith fluctuations in these currencies. TheCompany has also noted that the contourof exchange risk exposure now is quitedifferent from what it has been inprevious years, as cross currencymovements have added an additionaldimension of volatility The Company has strengthened theexisting policies and processes for the useof financial derivative instrumentsconsistent with its risk managementstrategy and these strategies arereviewed by a Risk Management Boardon a quarterly basis. Also, the Companyhas developed software products tomonitor, manage and report theexposures related to hedging transactionson a daily basis.2.2.2 Counterparty risk in treasury operations The treasury operations of hedging haveto be conducted through banksmandated by the RBI as ‘authorised’ forthe purpose of such transactions. In therecent economic and banking turmoil, allleading banks have been affected invarying degrees In order to protect itself against possibledefault by the counterparties for thesehedging transactions, TCS has beenmonitoring counterparty health,diversifying the risk by having multiplebanks with whom such transactions areundertaken and also monitoring limitswith each of them dynamically Detailed records are maintained of allsuch forward and options contracts and adaily P&L statement is also prepared andreviewed by senior management.2.3 Regulatory & Compliance related risk The Company has a global footprint andas it increases its global reach andoperations the risk of ensuring 100%compliance with the regulations and lawsin the various jurisdictions where it has apresence has increased To mitigate this risk, the Company hasestablished a separate office under asenior and experienced Chief ComplianceOfficer and has also put in place aninstitutionalized structure to ensure 100%regulatory and legal compliance acrossthe globe. The Chief Compliance Officerhas a team of senior persons from allrelevant functions as part of his team toensure compliance with all laws andstatutory requirements in thesecountries. The use of local managers aswell as consultants, auditors, lawyer’sspecialists and experts in these countrieswhere we have a presence is encouragedto ensure 100% compliance.2.4 Strategic Risks2.4.1 Global Market Risks With economic slowdown, coupled withconsequences of credit squeeze across theglobe and the consequent increase inbankruptcies, M&A’s and Governmentalbailouts of global organizations in thedeveloped economies , the contours forconducting business globally is continuallychanging TCS has adapted its agile approach,customer reach and market presence, toeffectively create proactive opportunitiesin such dynamic scenarios – where vendorconsolidation, cutbacks in discretionaryspending and increased demands formore services has become commonplace The approach adopted by the Companyinvolves effectively leveraging its market/product/customer relationships built overmany years, to work closely with its clients– to help them address their businessproblems and to enable them to meettheir business objectives. TCS does this bybringing all the innovation, domainknowledge and technical expertise of theentire organization to bear on customerrequirements and needs so that we canprovide clients with value-addedsolutions.2.4.2 Reputation risksThe Company has recognized that its wideglobal presence has to be strengthenedby appropriate brand building. It has beeninvesting in building the brand of‘Experience Certainty’ through multiplemeansAs TCS is part of the Tata Group ofCompanies and is a signatory of the TataBrand Equity – Brand Promotion (BE-BP)agreement, it is governed by strictstandards in its communications as wellas use of the Tata Brand and ensurescompliance with the same. Strong62