Why FX Risk Management is broken: And what boards need to know to fix it

Arbeitspapier

In this paper we challenge the role of Foreign Exchange Risk Management (FXRM) in corporate management. We believe it is fair to characterize FXRM, on the whole, as a legacy activity rather than something that reflects a realistic cost-benefit analysis at the enterpriselevel. The Board of Directors, as the designated guardians of the interests of shareholders, has a key role in setting the firm on a path towards a cost-efficient and centralized FXRM that preserves the firm's transparency and predictability towards the investor community. A policy conclusion from our analysis is that responsibility for FX policy should shift from the traditional Finance/Treasury orientation to a group risk function (e.g. a Chief Risk Officer) supported by a risk committee dedicated to integrated risk management.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 1078

Classification and Topics

• Classification: Wirtschaft ; Corporate Finance and Governance: General ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: Foreign exchange ; risk management ; transparency ; risk committee ; integrated risk management

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jankensgård, Håkan ; Alviniussen, Alf ; Oxelheim, Lars
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/129638
• Last update: 10.03.2025, 11:41 AM CET