MODULE EXAMPLE: Foreign Exchange Risk Management

Problem Objective Solution Results

Problem

Foreign exchange mismanagement represents one of the greatest risks to international operations. With decentralized decision-making for individual exposures, individual assistant treasurers can exert considerable influence on a company's returns.

Objective

Companies require a consistent, logical process that helps assistant treasurers and functional units analyze and understand the foreign exchange risk that they face as well as possible financial and non-financial hedging alternatives.

Solution

PortBlue's Foreign Exchange Risk Management Module helps treasurers assess possible financial hedging strategies for exposures: both individual and aggregated. For Individual exposures, PortBlue's module helps you

• Identify a trigger event that will create a foreign exchange exposure.
• Classify the nature of the exposure
• Define the size and timing of the exposure
• Determine the objectives to be achieved by a hedging strategy
• Review alternative hedging strategies based on their impact on cash flow, earnings, and balance sheet

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Instead of putting the burden on the user to best understand complex financial vehicles, this preliminary results page presents a prioritized list of hedging instruments, complete with easy-to-understand definitions, pros and cons, and specific facts relating to the situation faced by the user.

The module also presents non-financial alternatives to foreign exchange risk (including natural and operational hedges), examining aggregate levels of exposure

Results / Benefits

The module presents a standardized approach to assistant treasurers across geographically dispersed units or disparate lines of business without a centralized finance function. By routinizing best practices in the daily operations of finance professionals, the module helps minimize risks at the business unit level and maximize financial management across the enterprise.