Foreign Exchange Risk and issues related to it have rarely been of major concern to Finance professionals. Not only in India but across the globe, we have seen that small and medium sized companies do not have dedicated treasury personnel who will deal with FX risk specifically and these issues are mostly addressed by the finance & accounts team with no expertise in managing FX risk.

When it comes to FX, people are intimidated by "the markets" and fear they might make the wrong decision that will lead to a loss. Even those who are comfortable making swift and wise decisions in other finance related operations find themselves "passing the buck" or running an outdated strategy when it comes to managing FX risk. This results in most of the companies running FX hedge programs that are reactive and not proactive.

Be it poor forecasts of FX exposure, benchmarking the exposures or having a scientific approach towards hedging these exposures. It has always been difficult for managers every given month to align their FX risks with market volatility and are always worried about the results of their so called hedging programs. One bad month happens and the FX team finds itself under an unwanted microscope of senior management. The FX team tries to figure out what went wrong and perhaps a few tweaks to the process are put in an attempt to avoid such problems from happening again.