Definition
The risk that a change in external interest rates leads to an increase in the group’s cost of borrowing.
Controls and procedures
- There is a board approved policy on hedging interest rate risk.
- The group uses derivative financial instruments to hedge the risk of movements in interest rates.
- Exposures are monitored by an experienced central treasury department.
- The interest cost represents a relatively small part of the group’s cost base.
- See more commentary on interest rate risk.