5 techniques FDs use to manage Brexit currency risks through Brexit

5 Techniques CFOs use to manage Brexit

Forex volatility impacts millions of UK businesses. With changing Euro/GBP or JPY/GBP or USD/GBP rates, businesses' financial forecasting can be dramatically impacted. To dramatize this, if a UK based business sells goods in the local market, but imports parts from Europe, a 10% appreciation of the Euro can cause margins to shrink by 10%.

 

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5 techniques Financial Directors are using to manage Brexit currency risks…

Free Download – 5 Techniques to Manage Brexit Currency Volatility.

There are endless times Financial Directors are called into meetings to explain the impact of the latest headline on business operations. Here are 4 tips to manage the hysteria surrounding Brexit and ensure focus on solid financial practices.

1. Clearly Communicate Financial Situations

 

Discussing financial realities is more critical than ever. This is true for both internal audiences, such as executive management, and external ones like shareholders and key stakeholders require a new level of transparency. Ensure that financial documentation (like stress tests) is shared regularly and timely. This builds credibility and alignment towards handling difficult external realities like Brexit.

2. Provide Longer Term Perspective

 

While news cycles are very short, FDs must show a longer trajectory and stability. Financial directors can help manage hype and hysteria by providing a historical view and a longer term outlook for the business and the financials.

3. Anticipate potential risks and model them

 

There are many possible consequences of Brexit. While it is impossible to anticipate and manage all of them, some of them are clear and have already been impacting UK SMEs. There are several online tools that make identifying these risks and neutralizing them easier. Hedgewiz has a free online currency risk management tool that enables FDs to map all their exposures and model the impact here

4. Create operational plans for different scenarios

Financial Directors can show leadership by creating a base case and alternatives for managing different functions in different scenarios. Depending on the scale and scope of the exposure, FDs would be well served to have a ‘back pocket’ plan for scaling or curtailing sales, staff, production, marketing, and the like.  Some forethought as to the critical resources to achieve targets and manage political and economic uncertainty will go a long way in providing a stable hand through Brexit’s volatility.

5. Be Proactive about Risk Management

FD’s can already take action to neutralize certain risks. Specifically, currency risks can be mitigated with professional online risk management platforms and currency risk experts. It is important for FDs to understand the nature of their exposures and have enable a company-tailored plan for reducing currency risks.

What to do next: 30 min Webinar on Brexit Currency Risks

Currency Risk Management: Free Webinar. In this short web event, CFOs and Financial Directors will come to understand
– Best practices for risk identification & management
– Common currency risk mistakes SMEs make
– How to efficiently manage currency risks and practical tips to save costs in the process.

  • Wednesday April 26th, starting 3pm UK time.

 

Can’t make it?

Register and we’ll be sure to send you a recording of the session of how CFOs are managing currency risks. For immediate help navigating currency risk management contact info@hedgewiz.com

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