The operative management of treasury activities of Tieto is centralized into the Group Treasury. The Group Treasury is responsible for managing the Group’s financial risk position and maintaining adequate liquidity. The Treasury Policy defines principles for measuring and managing the liquidity risk, interest rate risk, foreign exchange risk and counterparty risk of the Group. The policy also defines the division of responsibilities with regard to financial risk management.

Management of financial risks in 2009 is described on pages 92–94 of Tieto's Annual Report 2009.

Currency risk management – transaction exposure
Foreign trade, the Group’s internal transactions and liquidity management in the non-euro countries generate a transaction exposure of the Group. The exposure includes signed purchase and sales contracts, accounts receivables and payables of operative companies in foreign currency, bank account balances in non-home currency accounts and internal funding. The Group’s policy is to hedge all identified currency exposures within the limits defined in the Treasury Policy. Tieto uses for example currency forward contracts, swaps and options for hedging. The Treasury Policy defines the approved hedging instruments for the Group.

Currency risk management – translation exposure
Translation exposure of Tieto’s shareholders’ equity includes the acquisition price, share capital, restricted and non-restricted reserves as well as the result of the period for subsidiaries in non-euro countries. Translation exposure also includes such monetary items for which the exchange difference shall be booked against equity. According to the Treasury Policy, hedging translation exposure is subject to Board decision.

Interest rate risk management
The objective of interest rate risk management is to minimize the effect of interest rate fluctuations on the Group’s annual results and economic positions. Group Treasury is responsible for the monitoring and operative management of the Group’s interest rate position. Interest rate position includes loans, financial investments and derivative contracts.

The Treasury Policy defines the interest rate risk management principles for the Group. According to the Treasury Policy, 12 months is defined as a benchmark for the Group’s interest rate position, in terms of average time to re-pricing. The Treasury Policy defines the allowed interest rate hedging instruments for the Group.

Liquidity risk management and funding
Liquidity risk management and funding principles are defined in the Treasury Policy. One of Group Treasury’s main tasks is to secure adequate funding for the Group. No more than 20% of the Group’s external gross debt is allowed to mature within the next 12 months.

Credit risk management
Credit risk is being managed on a Group level. The credit risk derives from financial investments, derivative contracts and customer-related risks, such as accounts receivable. Group Treasury maintains a counterparty list for commercial papers and other financial transactions according to limits set in the Treasury Policy. According to the Treasury Policy, core banks of the Group should have a minimum long-term rating of Baa3 or BBB-. The credit policy defines the limits for the acceptable credit risk level. Customer-related credit risks are monitored based on their payment history and financial strength.

Capital management
The capital structure of the Group is being continuously monitored through gearing. Gearing level is calculated by dividing interest-bearing net debt with total equity. The target is to keep the capital structure on a level securing adequate means for the operations.