10. Risk Management: Foreign Exchange

  1. Steven M. Bragg

Published Online: 13 DEC 2011

DOI: 10.1002/9781118268391.ch10

The New CEO Corporate Leadership Manual: Strategic and Analytical Tools for Growth

The New CEO Corporate Leadership Manual: Strategic and Analytical Tools for Growth

How to Cite

Bragg, S. M. (2011) Risk Management: Foreign Exchange, in The New CEO Corporate Leadership Manual: Strategic and Analytical Tools for Growth, John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118268391.ch10

Publication History

  1. Published Online: 13 DEC 2011
  2. Published Print: 11 JUL 2011

ISBN Information

Print ISBN: 9780470912874

Online ISBN: 9781118268391

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Keywords:

  • budgeting;
  • foreign currency;
  • foreign exchange;
  • tax

Summary

When dealing in foreign currencies, a company must determine its level of exposure, create a plan for how to mitigate that risk, engage in daily activities to implement the plan, and properly account for each transaction. Each of these steps is covered in this chapter. Determining the extent of a company’s currency risk can be a frustrating exercise for the foreign exchange specialist, who is often at the receiving end of a flood of disorganized information arriving from the accounting, budgeting, tax, and treasury departments. A variety of foreign exchange hedging strategies is noted in the chapter. The three main strategy groupings are to: not hedge the exposure, hedge the exposure through business practices and hedge the exposure with a derivative. The chapter describes seven strategies are all internal business practices that reduce currency exposure.

Controlled Vocabulary Terms

budgeting; Foreign exchange services; Risk management