1. Risk, Uncertainty and Exposure
1.1 Risk, Uncertainty and Exposure: Meaning
1.1.1 What is Risk?
1.1.2 What is Uncertainty?
1.1.3 Attitudes Towards Risk
1.1.4 Exposure
1.2 Business Risk or Corporate Risk: Types
1.2.1 Commercial Risk
1.2.2 Financial Risk
1.2.3 Country Risk
1.2.4 Price Risk
1.2.5 Credit Risk
1.2.6 Interest Rate Risk
1.2.7 Currency Risk (Foreign Exchange Risk)
1.3 Foreign Exchange Exposure and Foreign Exchange Risk
1.4 Foreign Exchange Exposure: Defined
1.5 Basic Types of Foreign Exchange Exposure
1.5.1 Translation Exposure
1.5.2 Economic Exposure
1.5.3 Transaction Exposure
1.6 Measuring Exposure to Foreign Exchange Risk
1.6.1 The Exchange Traders Measure
1.6.2 The Accountants Measure
1.7 Accounting Aspects of Exposure Management
1.7.1 Treatment of Foreign Currency Transactions
1.7.2 Translation of Financial Statements of Foreign Branches
1.7.3 Disclosures
1.8 Components of Foreign Exchange Risk Exposure
1.8.1 Currency
1.8.2 Volatility
1.8.3 Magnitude
1.8.4 Duration (Time Horizon)
1.8.5 Trend of Cash Flow
2. Foreign Exchange Risk Exposure Management
2.1 Does Foreign Exchange (FX) Risk Matter?
2.2 Risk Exposure Management
2.2.1 Risk Avoidance
2.2.2 Risk Transfer and Distribution
2.2.3 Risk/Uncertainty Reduction
2.2.4 Loss Prevention
2.2.5 Loss Reduction
2.2.6 Risk Neutralisation
2.3 Objectives of Exposure Management
2.4 Arguments for and Against FX Exposure Management
2.5 Administration of Exposure Management
2.6 Organisational Structure for Exposure Management
2.7 Profit Centre vs. Cost Centre Treasury
3. Hedging: Techniques and Alternatives
3.1 Hedging: Meaning and Alternatives
3.1.1 Hedging Everything
3.1.2 Hedging Nothing
3.1.3 Hedging Selectivity
3.2 Hedging Versus Speculation
3.3 Corporate Internal Hedging Techniques
3.3.1 Internal Techniques Affecting Existing Positions
3.3.2 Internal Techniques Affecting Future Positions
3.3.3 Money Market Hedge
3.3.4 Risk Shifting Hedge
3.4 Corporate External Hedging Techniques
3.4.1 Derivatives Defined
3.4.2 Academic Views
3.4.3 Basic Types of Derivative Markets
3.4.4 Basic Derivative Instruments
3.5 Strategic Responses to Foreign Exchange Risk Exposure
3.5.1 Market Selection: Markets in which to Sell
3.5.2 Pricing Strategy
3.5.3 Product Strategy
3.5.4 Production Sourcing
3.5.5 Plant Location
3.5.6 Input Mix
3.5.7 Raising Productivity
4. Exposure Management: Role of Information System
4.1 Management Information Systems
4.2 Decision Support Systems
4.3 Executive Support Systems
4.4 Strategic Information Systems
4.5 Management Information System for FX Exposure
4.6 Information System for Exposure Management: Survey Findings
5. Foreign Exchange Risk Exposure Management: Select Studies
6. Foreign Exchange Risk Management: Techniques and Applications
7. Developing Information System for Exposure Management
7.1 Introduction
7.2 The Company and its Structure
7.3 Exchange Risk Policy Objectives
7.4 Management Information System for Exposure Management of ABC Company
7.5 Operational Guidelines Followed by ABC Company for FX Risk Management
8. Summary and Conclusions
8.1 Foreign Exchange Risk Exposure Management: Findings
8.2 MIS for Foreign Exchange Risk Exposure Management
8.3 Developing MIS for Foreign Exchange Exposure Management
8.4 Conclusion
References
Index
