Jasz
VIP Contributor
Foreign exchange risk management procedures should be in place to ensure that the risks of an exposure to foreign exchange risk are managed and controlled. The objective of these procedures is to ensure that appropriate risk mitigation strategies are put in place, so as to minimize the impact of such exposures on the business.
The process of managing foreign exchange exposures is a continuous one, with no single point of failure by which all risks can be eliminated.
Identify the types of exposure (i.e., currency risk) and its associated characteristics (i.e., maturity, credit quality, etc.) at the beginning of each year.
Determine whether or not there are any significant changes in circumstances over time (i.e., market movements).
Review the existing hedging policies and techniques that have been implemented to address those exposures identified earlier, including whether they are still valid at this stage or if they need to be reviewed and amended if necessary.
If there are significant changes in circumstances over time, then it may be necessary to revisit these policies and techniques again as part of a more comprehensive review process before implementing any new hedging strategies.
The process of managing foreign exchange exposures is a continuous one, with no single point of failure by which all risks can be eliminated.
Identify the types of exposure (i.e., currency risk) and its associated characteristics (i.e., maturity, credit quality, etc.) at the beginning of each year.
Determine whether or not there are any significant changes in circumstances over time (i.e., market movements).
Review the existing hedging policies and techniques that have been implemented to address those exposures identified earlier, including whether they are still valid at this stage or if they need to be reviewed and amended if necessary.
If there are significant changes in circumstances over time, then it may be necessary to revisit these policies and techniques again as part of a more comprehensive review process before implementing any new hedging strategies.