Foreign Exchange (FX) risk management is driven by the organization’s FX objectives, policy and strategy and is enabled by the implementation of a good FX risk management process.
In order to implement a good FX risk management process organizations can apply the Zanders risk management framework starting with identification of different kinds of FX exposures, as follows:
The FX objectives are defined to facilitate proper management of the impact of FX movements on the organization’s mission and individual projects being implemented. Expected cash flows can deviate significantly when calculated according to the functional currency of the organization over time due to FX volatility. The decision on the level of acceptable risk needs to be embedded in the FX objectives. Leading applicable objectives to manage FX exposures at international organizations are:
Managed by Sluijmer Multimedia and hosted by True.