4 Step FX Risk Management Policy A Foreign Exchange (FX) Risk Management Policy is a formal written document that serves as a framework for mitigating and optimizing a company’s FX risk profile. In practice, FX risk management policies can vary widely across organizations depending on their size and structure. Getting started or improving already existing policies can be a challenge without knowing best practices and seeing examples. Therefore, this FX Risk Policy Drafter was designed to help you create a comprehensive Foreign Exchange Risk Management Policy in 4 simple steps. Enter the company name, home country, functional currency, effective date, and review period. Establish internal controls by appointing at least three personnel to the segregated duties of trading, accounting and record keeping. Define materiality thresholds by specifying minimum transaction amounts and hedge coverage levels. Specify the derivative hedging instruments authorized for use and minimum acceptable counterparty credit ratings. Upon completing these 4 steps, 9 sections of the Foreign Exchange Risk Management Policy are drafted and include (1) Function, (2) Definitions, (3) Policy Guidelines, (4) Roles and Responsibilities, (5) Reporting (6) Internal Controls (7) Counterparty Guidelines (8) Policy Review and (9) Policy Approval. Upon reviewing these 9 sections, you will clearly see how the inputs in Steps 1 through 4 are used, and how the program as a whole serves to mitigate currency risk exposures inherent in a company’s business model by specifying how the company’s currency risk management goals will be carried out. You can use this tool to improve or enhance your already existing policy or to lay out a new formal Foreign Exchange Risk Management Policy with clear parameters and guidelines for managing currency risk across the enterprise. Not only does this tool offer a well written policy you can use to tailor your own policy after, it also provides the level of detail to make implementation feasible. Take advantage of this Foreign Exchange Risk Policy Drafter as your own writing tool to help create an optimal foreign exchange risk management policy for your organization. To learn more about about corporate currency risk management best practices, start your FX risk management training today, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples & events at FXCPE.com. Start FX Training March 10, 2020By FX Initiative FX Risk Policy Drafter, General accounting, appetite, approval, coverage, CPE, currency, derivative, economics, education, finances, forex, fxcpe, fxinitiative, guidelines, hedge, learning, levels, management, operations, personnel, plans, policy, prarmeters, procedures, resources, risk, rules, thresholds, tolerance, traning, treasury 0 0 Comment
FX Risk Management Maturity Model Foreign exchange (FX) risk management involves identifying, analyzing, and prioritizing various foreign currency exposures, and developing and implementing a coordinated and systematic plan that utilizes company resources efficiently and effectively to mitigate FX risk. The degree to which companies implement adequate foreign exchange risk management practices can vary substantially, from not managing the risk at all to engaging in robust hedging activities, and as a result, the impact on the bottom line can vary widely across organizations. This FX Risk Management Maturity Model outlines the 5 stages of a comprehensive currency risk management program. The process involves performing a FX risk assessment, developing a FX risk management policy, and implementing progressive FX hedging strategies. 5 Stage FX Risk Management Maturity Model FX Risk Assessment: Exposure Identification & Measurement FX Risk Management Policy: Hedging Guidelines & Procedures Balance Sheet Hedging: Booked Receivables & Payables Cash Flow Hedging: Forecasted Revenues & Expenses Net Investment Hedging: Subsidiary Earnings & Equity The design and implementation of a FX risk management program must take into account the specific goals and objectives of the firm, the organizational structure and operations, the line of products and/or services, and any other variable that may be material and of relevance. For firms that are new to foreign exchange risk management, emphasis should be placed on progress over perfection. Initial risk management plans are never perfect, and should be viewed as a process that is responsive to change and capable of continuous enhancement. To learn more about FX risk assessments, policies, and hedging strategies, start your FX risk management training today, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples & events at FXCPE.com. Start FX Training February 25, 2020By FX Initiative General accounting, assessment, balancesheet, best, cashflow, corporate, CPE, currency, economics, education, events, examples, exchange, expense, finance, foreign, forex, fxcpe, fxinitiative, hedging, learning, management, maturity, model, netinvestment, payable, policy, practices, receivable, revenue, risk, stages, subsidiary, training, treasury 0 0 Comment
Mapping Currencies Across Countries Mapping Currencies Across Countries: It is evident that no one single world currency exists. There are over 180 currencies recognized as legal tender in circulation throughout the world. The most widely used list of currencies is known as ISO 4217, which is a standard published by the International Organization for Standardization or the ISO. The ISO is an international standard-setting body composed of representatives from various national standards organizations, and the ISO 4217 currency codes shown in this interactive map are used in banking and business globally. While many of us are familiar with the “Major” currencies, which include the euro, British pound sterling, Australian dollar, New Zealand dollar, United States dollar, Canadian dollar, Swiss franc, and Japanese yen, there are so many more currencies to explore. This interactive map helps you explore the world through the lens of currency. All 180 currencies in circulation are mapped using geographic coordinates and ISO 4217 currency codes. Simply click on the dots on the map to reveal the ISO 4217 currency code, currency name, country. To learn more about conquering currency risk, start your FX risk management training today, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples & events at FXCPE.com. Start FX Training February 18, 2020By FX Initiative Examples, General CAD, Continuing Professional Education, CPE, Currency, Dollar, EUR, Euro, Forex, FX Initiative, GBP, ISO 4217, JPY, Pound, USD, Accounting, Business, Economics, Education, Finance, FX, Global, Hedging, International, Learning, Majors, Management, Risk, Trade, Training, Yen 0 0 Comment
FX Strategy Simulation: Forward Contract FX Strategy Simulation - Forward Contract: To put the concept of a forward contract into practice, this foreign exchange (FX) strategy simulation uses the FX Derivative Speculator to demonstrate the economics and accounting of a foreign currency forward contract using the default accounting treatment to help reinforce the following two points: The functional currency value of the forward at any point in time is equivalent to the difference between the forward rate on the contract and the then prevailing forward rate in the market. The interest rate differential between the two currencies in the pair determines the forward point premium or discount applied to the spot rate to compute the "all in" forward rate. To learn more, start your FX risk management training today, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples & events at FXCPE.com. Start FX Training February 11, 2020By FX Initiative Examples, FX Derivative Speculator, FX Spot & Derivatives accounting, CPE, currency, derivative, discount, economics, education, example, finance, forward, FXCPE, fxinitiative, gain, hedging, learning, loss, management, premium, pricing, rate, risk, simulation, strategy, training, treasury 0 0 Comment
February 2020 Newsletter Explore our February newsletter and discover the latest blog posts and insights from FX Initiative on currency risk management. We help finance, accounting, treasury, and sales professionals stay up to date with new training content, CPE webinars, and helpful tips & resources. Scale the learning curve quickly and easily with our foreign exchange risk management training, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Start Training > View Newsletter February 4, 2020By FX Initiative General accounting, code, compliance, CPE, currency, development, economics, education, examples, finance, forex, fxcpe, FXGC, fxinitiative, global, insights, learning, management, mastery, newsletter, OEM, professional, risk, sales, training, treasury, updates, videos, whitelabel 0 0 Comment
White Label Web Applications FX Initiative's white label web applications are designed to help treasury professionals and FX sales teams with a wide variety of foreign exchange (FX) risk management challenges and opportunities. Whether you are creating a FX risk policy or analyzing economic and accounting scenarios, our risk models and strategy simulations share best practices in easily understandable formats. Examples include: FX Risk Policy FX Terms Glossary ISO Currency Codes Foreign Subsidiaries FX Revenues FX Expenses FX Receivables FX Payables FX Spot Transactions FX Forward Contracts FX Option Contracts FX Zero Cost Collars Our white label web applications are branded with the client's logo and embedded as an iframe into the client's website. An iframe is one of the most convenient HTML structures, and is an embedded window on the client’s web page that shows content hosted on FX Initiative’s servers. In 4 simple steps, our solutions can be deployed on the client's website quickly and easily with minimal technology resources. Learn More January 28, 2020By FX Initiative Examples, General, Partnerships accounting, best, calulators, corporate, CPE, economics, examples, exchange, expense, finance, foreign, forward, fxcpe, fxinitiative, learning, management, models, option, payable, practices, receivable, revenue, risk, software, tools, training, treasury 0 0 Comment
Mastering Currency Risk Management Webinar Program Overview Join us for an educational webinar on Mastering Currency Risk Management as we address the fundamental concepts of corporate foreign exchange (FX) risk management. This informational session will share how to assess a company’s FX risk profile using a step-by-step analysis framework, the four approaches for managing currency risk, and the impact FX risk has on the financial statements. Participants will learn key terminology and best practices for incorporating company personnel, operations, resources, and policy into a world class FX risk management program. Learning Objectives Discover how leading multinational corporations manage foreign exchange (FX) risk. Explore FX risks on the Income Statement, Balance Sheet, and in annual reports (10-K). Recognize FX terminology such as transaction risk, translation risk, and economic risk. Identify the essential elements of a world class corporate FX risk management program. Who Should Attend? New and seasoned finance, accounting, treasury, and related professionals (CPA, CIA, CRMA, CFE, etc.) interested in international business. Register January 21, 2020By FX Initiative General, Webinar accounting, best, corporate, CPE, economics, education, exchange, finance, foreign, fxcpe, fxinitiative, learning, management, practices, risk, training, treasury, webinar 0 0 Comment
Happy New Year from FX Initiative Happy New Year from FX Initiative! Thank you for a great 2019, and we wish you a safe and successful 2020! December 31, 2019By FX Initiative General 2020, Accounting, Business, CPE, Currency, Development, Economics, Education, Finance, Forex, Goals, Hedging, International, Learning, Management, NewYear, Payments, Professional, Resolutions, Risk, Training, Treasury 0 0 Comment
December 2019 Newsletter Explore our December newsletter and discover the latest blog posts and insights from FX Initiative. We help finance, accounting, treasury, and sales professionals stay up to date with new training content, CPE webinars, and helpful tips & resources. Get started with our foreign exchange risk management training, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Start Training > View Newsletter December 3, 2019By FX Initiative General accounting, annual, balancesheet, compare, contrast, CPE, currency, development, disclosures, documentation, economics, education, examples, finance, foreignexchange, forex, fxcpe, fxinitiative, hedging, incomestatement, insights, learning, management, newsletter, professional, reports, risk, training, treasury, updates, videos 0 0 Comment
Categorizing FX Risk Exposures (Video) Categorizing FX Risk Exposures (Video): Explore how foreign exchange (FX) transaction risk, translation risk, and economic risk impact the income statement and balance sheet. This video is a preview of FX Initiative’s FX Risk Exposures course as part of Learning Objective #1. To learn more, start your FX risk management training today, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples & events at FXCPE.com. Start FX Training November 26, 2019By FX Initiative FX Risk Exposures accounting, balancesheet, cashflows, CPE, currency, economic, economics, education, expense, exposures, financialstatements, forex, forwards, fxcpe, fxinitiative, hedging, incomestatement, learning, loan, management, payable, receivable, reporting, revenue, risk, strategy, training, transaction, translation, treasury 0 0 Comment