Risk Management

Tackling Balance Sheet FX

Tackling Balance Sheet FX

FX risk management is filled with nuances affecting how some exposures are commonly hedged versus others, but there is one crucial differentiator dividing two very different approaches – that of forecastversus balance sheetexposures. This is the first delineation to be made when we characterize FX exposures.

Is There Such a Thing as “Too Expensive” to Hedge?

Is There Such a Thing as “Too Expensive” to Hedge?

It is said that the two happiest days in boat owners’ lives are the day they buy the boat, and the day they sell it.  If you own a boat, you understand this ism based on the money and effort it costs to keep a boat. Executives feel the same fervor when their operations expand into fast growing economies with large populations…

Identifying FX Exposures: A Critical Step in Developing an FX Risk Strategy

Identifying FX Exposures: A Critical Step in Developing an FX Risk Strategy

In an earlier article, we helped you build a foundation for your FX risk management strategy with a “brick and mortar” analogy… the process of collecting exposure data and executing hedges we described as “bricks,” and risk measurement and analysis using VAR and confidence intervals were described as “mortar.” This article will discuss a crucial step in your foundation-building process: gathering accurateFX exposure data.

How to Convince your CXO to Hedge Forex

How to Convince your CXO to Hedge Forex

Sir Arthur Conan Doyle said (via Sherlock Holmes), “When you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.” An unexplained, or otherwise anticipated “no” to the question of hedging FX is like a mystery. The way to decipher why executives won’t hedge, and convince them to act, is to remove the possible arguments against hedging, one by one.

Why Not to Not Hedge Your FX Risk

Why Not to Not Hedge Your FX Risk

If only executives spoke as parents do to their children: Mom, can I…? No. Why not? Because you did not eat your vegetables. Or, the infamous, because I said no. At least you’d know there is or isn’t a chance to change their view and what action is required…

FX Budget Rates: Confident Becomes You

FX Budget Rates: Confident Becomes You

Treasurers and risk managers who’ve been around the block recognize that fluctuating market rates rapidly affect their ability to capture that rate.

This article focuses on how you can set budget rates and align your FX strategy to increase confidence that your company will convert its forecast exposures at the budgeted conversion rate.

A Dose of Reality: Rethinking FX Budget Rates

A Dose of Reality: Rethinking FX Budget Rates

We all daydream of winning the Publishers Clearing House Sweepstakes. A cushion of $25,000 per month would go a long way to pay bills, save money for rainy days, and build a retirement nest egg. Alas, the probability of such a stroke of luck is miniscule. 

Put Confidence in Your FX Strategy

Put Confidence in Your FX Strategy

Remember the story of the three little pigs? If you’ve ever leaned against a brick wall, you know the unsung hero of the story was mortar – the cement that connects every brick so the wall stays intact, and serves its purpose.

Our title, Put Confidence in Your FX Strategy, asserts that the way to build a strategy is to include confidence among the materials used, like the mortar in a brick house.

Measuring FX Risk: Crises with Confidence

Measuring FX Risk: Crises with Confidence

Corporate treasurers do more than ever before to identify and mitigate risk and to position their companies to weather market crises with confidence. According to Deloitte, 85% of companies are measuring their sensitivity to market risk, but a much smaller portion regularly assess the probability of their risk.

How to Use Probability to Manage FX Risk

How to Use Probability to Manage FX Risk

In our last article, we identified a clear risk management objective: certainty. Risk management is really about understanding and managing uncertainty to create more certainty.

They say, “what gets measured gets managed.” So, if you’re not measuring your FX risk, you might not be managing it – even if you think you are.

FX Risk Management Objectives

FX Risk Management Objectives

This article kicks off a new series of posts that will help treasury professionals understand conventional FX risk management practices and how they fit into a successful strategy.

There’s no better way to begin than to ask ourselves, “why do companies bother to use any of these conventional practices?”

How Populism Impacts Exchange Rates: What Your Company Needs to Know

How Populism Impacts Exchange Rates: What Your Company Needs to Know

The increasing global shift to populist-led governments has generated upheaval for currency markets. 

Populist governments are now in place in the United States, Turkey, Brazil, Italy, Hungary and Poland. Mexico recently ushered in a new president, Andrés Manuel López Obrador, who ran on a leftist, anti-establishment platform.

The Biggest Currency Risk Management Mistakes Companies Make

The Biggest Currency Risk Management Mistakes Companies Make

Corporate financial history is replete with examples of currency risk and trading management decisions that have backfired on companies.

Consider Toshihide Iguchi, a Japanese banking executive who turned a $70,000 in U.S. debt into a substantially larger debt of $1.1 billion, after making a bet on the U.S. fixed income market in 1983.

Year End Review: The Top 5 Volatile Currencies for 2018

Year End Review: The Top 5 Volatile Currencies for 2018

Currency volatility around the globe is stabilizing in late 2018, and that's good news for corporate financial officers who've been beset by excessive risk in the currency market during the first nine months of the year.

Geopolitical events and economic strife had steered currency risk upward in the first half of 2018, so a downward trend is welcome news for currency market participants.

Exchange Rates Don’t have to Hurt the Bottom Line

Exchange Rates Don’t have to Hurt the Bottom Line

For businesses with cross-border payments, ignoring the currency markets can be incredibly costly. Many business owners and executives are unaware if their company has any foreign currency risk at all. From hidden costs to currency management, we cover how to protect your bottom line when completing transactions across borders.