What Should a Currency Risk Management Event Involve?


Despite the UK’s decision to leave the EU, all small businesses either trade or aspire to trade with customers in foreign countries. In fact, positivity about Brexit is rising among small business owners, with 28% more having an optimistic outlook than a negative one. A currency risk management event can help small businesses to take into account currency fluctuations when going global. Read on to find out what information should be included in such an event, from explaining key terms to helping employees to learning how to predict the unpredictable

Currency Risk Explained

These events should start by giving an in depth explanation of the history and significance of key terms. Currency risk is a relatively recent phenomenon, which arose out of the rapid globalisation of the 1990s. In 1994, Latin American countries had a foreign debt higher than their ability to earn enough to repay. This was followed in 1997 by the collapse of the Thai Baht during the Asian currency crisis. This led to an interest in learning the art of managing currency risk.

If you have assets in a currency which begin to depreciate, then you may lose profits. Taking control of currency risk means that you can defend your businesses against the risk of unpredictable fluctuations in the value of currencies.

Where to Invest Assets

An event on avoiding currency risks should include a presentation on smart investments. Educate others on how to spot whether a currency is about to increase or decrease in value. If a country has high debt, then it is likely that investors will lack confidence in it and the value of the currency will fall. Stick to high value currencies that are rising steadily and consistently.

It is always a good idea to diversify your investments. If you put all your money in one place and that currency tanks, then you have lost everything, potentially including your business. By putting many investments in many different places, you can earn a small amount on many different strong currencies and quickly withdraw funds from depreciating currencies before losing too much income.

Hedging Your Investments

In finance, hedging is putting investments in two different locations in order to offset each other. This can be explained during a live event with an example. For instance, you can use matched betting to never lose when gambling. By betting on both sides of the outcome, you offset any loss with a win. Matched betters then take advantage of free bets to guarantee a profit.

You can apply the same logic to foreign trade. By using hedged exchange-traded funds and mutual funds, you will cut the risk of currency fluctuations. Unfortunately, this can be expensive and may decrease your gains. However, it does guarantee that your business won’t be destroyed due to currency risk.

Currency risk is something that all businesses have to deal with if they want to go global, but many lack the knowledge of what it is and how to avoid. A live business event can explain how foreign exchange should be treated just like any other investment. It should also recommend diversifying and hedging your investments to help to cut risk and ensure strong and consistent profits. Entrepreneurs and employees looking to go global will be able to learn valuable lessons to help them succeed in the global market.

About the author: Sally Perkins is a professional freelance writer with many years experience across many different areas. She made the move to freelancing from a stressful corporate job and loves the work-life balance it offers her. When not at work, Sally enjoys reading, hiking, spending time with her family and travelling as much as possible.