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The explosive growth in the global financial service industry during the last ten years has been one of the most far reaching and consequential economic developments since the industrial revolution. Financial services - the raising and managing of funds, the structuring of balance sheets and of financial exposures, the engineering of financial solutions - are making a key contribution to economic performance in the post-industrial age. Discussions of the impact of derivatives tend to be polarised: either they are seen as useful hedging devices or as threats to the global financial system. Critics of derivatives stress the interconnectedness of the global markets where a small uncontrolled event could develop into a major financial crisis. As chaos theorists like to put it ''the fluttering of a butterfly in the Amazon could ripple through the dynamics of the world''s ecology and cause an earthquake in Asia''. The reasoning for this belief is based on the leveraged nature of derivatives and was successfully illustrated by the recent problems with the Long Term Capital Management (LTCM). This case evaluates these claims and highlights the controls which are essential for derivatives to be an essential part of the tool kit for corporate treasurers.