{"url_path":"/sec/cik-0000100790/10-k/2026/item-7a","section_key":"item-7a","section_title":"Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-03","source_url":"https://www.sec.gov/Archives/edgar/data/100790/0000029915-26-000004-index.html","accession_number":"0000029915-26-000004","cik":"0000100790","ticker":null,"issuer_name":"UNION CARBIDE CORP /NEW/","edgar_url":"https://www.sec.gov/Archives/edgar/data/100790/0000029915-26-000004-index.html","primary_entity_key":"0000100790","primary_entity_name":"UNION CARBIDE CORP /NEW/"},"word_count":373,"has_tables":true,"body_markdown":"ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK\n\nUCC’s business operations give rise to market risk exposure due to changes in foreign exchange rates, interest rates, commodity prices and other market factors such as equity prices. To manage such risks effectively, the Corporation enters into hedging transactions, pursuant to established guidelines and policies that enable it to mitigate the adverse effects of financial market risk. Derivatives used for this purpose are designated as hedges per the accounting guidance related to derivatives and hedging activities, where appropriate.\n\nThe global nature of UCC’s business requires active participation in the foreign exchange markets. As a result of investments, production facilities and other operations on a global basis, the Corporation has assets, liabilities and cash flows in currencies other than the U.S. dollar. The primary objective of the Corporation’s foreign exchange risk management is to optimize the U.S. dollar value of net assets and cash flows. To achieve this objective, the Corporation hedges on a net exposure basis using foreign currency forward contracts, over-the-counter option contracts, cross-currency swaps and nonderivative instruments in foreign currencies. Exposures primarily relate to assets, liabilities and cash flows denominated in foreign currencies. The largest exposures are denominated in the Canadian dollar as well as the currencies of Europe and Asia Pacific.\n\nThe main objective of interest rate risk management is to reduce the total funding cost to the Corporation and to alter the interest rate exposure to the desired risk profile. To achieve this objective, the Corporation hedges using interest rate swaps, “swaptions,” and exchange-traded instruments. The Corporation’s primary exposure is to the U.S. dollar yield curve.\n\nUCC uses value-at-risk (\"VAR\"), stress testing and scenario analysis for risk measurement and control purposes. VAR estimates the maximum potential loss in fair market values given a certain move in prices over a certain period of time, using specified confidence levels. The VAR methodology used by the Corporation is a variance/covariance model. This model uses a 97.5 percent confidence level and includes at least one year of historical data. The 2025 and 2024 year-end and average daily VAR for the aggregate of all positions are shown below:\n\nTotal Daily VAR at Dec 3120252024\n\nIn millionsYear-endAverageYear-endAverage\n\nInterest rate$2 $2 $2 $3 \n\n25\n\n[Table of Contents](#i2aef629ae28d4ab08017402fb32766d6_7)"}