DESPITE a rash of derivative-related disasters, many companies still lack solid control measures and use old spreadsheets rather than invest in newer, expensive risk-management programmes, Price Waterhouse says. Price Waterhouse, after completing a survey on treasury control and performance standards of 386 corporations from 16 countries, said 66 per cent of respondents expected their group treasury function to contribute to profits. The poll of the companies, all drawn from the Fortune 5,000 list, was conducted in conjunction with treasury management associations from around the world, including 12 from Hong Kong. If the trend for treasurers to use increasingly sophisticated derivatives continued, companies 'will have to wake up to ensure that proper controls and systems are applied to support these activities'. Fewer than half of the corporations used package systems for treasury risk management, relying on spreadsheet-based applications, which were cheaper, but had poor security and data integrity. Price Waterhouse Global Corporate Treasury Services Group manager Susan Montanari said: 'Considering the wide range of treasury packages on the market, it is surprising that cost remains a significant issue when compared to the scale of the risks being managed. 'The cost of a disaster far exceeds the average cost of automating the department. 'Management needs to ask themselves whether they can afford not to invest in effective systems.' The survey found that between 69 per cent and 83 per cent of corporations claimed to have formal policies for core treasury activities. 'However, in many cases, the real effectiveness of this control is highly questionable,' Price Waterhouse said. 'The treasurer is typically responsible for developing treasury policy, often without the details of the policy being checked. 'In more than 30 per cent of companies, the board of directors do not formally approve treasury policy. 'In more than 50 per cent of companies, the board does not receive regular management information on treasury activity. 'In almost half of companies, the treasury function is operating without adequate limit controls over its risk management activities.' Mohan Kohli, a partner with Price Waterhouse, said many companies appeared to rely too heavily on policy statements on risk management which were not effective on their own. 'They must be supported by detailed control parameters to monitor adherence,' Mr Kohli said. 'In most of the recent treasury disasters, policies were in place . . . the fault lay in the risk reporting and monitoring system. 'Management need to recognise that treasury is an increasingly important business segment which can make or break any significant corporation.' At least half of respondent companies from France and Norway fully hedged treasury risk, while more than 80 per cent managed their risk in Sweden, Finland and Hong Kong. More than 25 per cent of respondent companies in Sweden, South Africa and Finland operated treasuries as profit centres, and the lowest level of using treasuries to generate profit was in Britain, with three per cent.