Reval Examines What Market Crises Can Teach Companies and Investors About Accounting for Risk

New York, June 9, 2010 – Companies that elected not to apply hedge accounting treatment to the derivatives they use to hedge business risk, but simply recorded fair value movements through profit and loss on their balance sheets, suffered most during the significantly volatile times since the global financial crisis, says Reval ( in a new white paper, “Hedge Accounting: Coming of age in the global financial crisis.” This white paper is one of two released this past week by Reval, the leading global provider of derivative risk management and hedge accounting solutions.

Since the financial crisis took hold in 2008, “increased market volatility resulted in large movements in mark-to-market valuations on derivative positions across all asset classes,” says Blaik Wilson, Reval Solution Consultant, Asia Pacific, and member of the Reval Hedge Accounting Technical Taskforce (HATT). “For those derivatives not being hedge accounted, these fair value movements went directly to P&L, and in some instances wiped out an entire year’s operational profit.” Wilson examines which accounting treatment provided the best return to companies and their investors.

In his white paper, “Hedge Accounting: What worked, what didn’t, and what happens next,” Wilson shares best practice information about hedge accounting in the “new normal,” which characterizes the state of market volatility and uncertainty companies must operate under since the global financial crisis. Organizations that had achieved hedge accounting easily in the past began to fail the criteria laid out in global hedge accounting standards under International Accounting Standard (IAS) 39 and ASC 815 (FAS 133). Wilson examines the root causes of these failures, why some organizations were better prepared than others, and how companies can better prepare for the challenges going forward.

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About Reval

Reval is a global SaaS provider for Treasury and Risk Management, helping enterprises better manage cash, liquidity and financial risk, and account for and report on complex financial instruments and hedging activities.

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