Description
Understand the importance of hedging properly and gain a framework for taking the first steps toward implementation.Many corporations have shied away from hedging, not recognizing the financial risks and exposure they are taking by not doing so, believing prices will stay static or manageable. They have not properly evaluated the exposure they face. They also shy away from hedging because they are not knowledgeable about futures and options, believing these financial instruments are risky rather than perceiving them as an insurance policy to help mitigate risk. This presentation will help you recognize the importance of hedging properly and provide a framework for taking the first steps toward implementation. This workshop is critical for companies that might have acquired a business that now face new financial risks and exposures they may not have had before.
Date: 2023-03-08 Start Time: End Time:
Learning Objectives
Determining Your Financial Risk Exposure and Optimal Risk Profile
• Analyze All Business Sectors and Timing of Purchase and Sales as Well as Inventory
• Include Raw Commodities Plus Fuel and Currency Exposure, If Applicable
• Consider Supply Chain Risks, Crop/Weather Risks, and Other Factors That Can Increase Price Exposure and Past Steps to Try to Mitigate This Risk (Supplier Contracts, Timing of Purchase, and Sales)
Examination of Corporate Policies and Guidelines
• Understand Corporate Governance, If Any, on What Is Permissible or Not and Seek Approvals
• Determine a Hierarchy for Control, Implementation, and Monitoring (Bank/Accounting Involvement)
• Will Hedging Be Done In-House or Sourced Out? Centralized Purchasing or by Business Unit
Evaluate Costs of Hedging vs. Not
• Determine Expected Outcomes in Transforming Unacceptable Risk to Acceptable Limits
• Decide on Realistic Objectives: How Much Risk Should Be Mitigated?
• Define Corporate Risk Tolerance So That It Aligns With Those Implanting a Strategy
Use the Right Measuring Stick to Evaluate Performance
• Understand Your Basis Risk (Cash Minus Futures)
• Consider Historical Market Volatility
• Examine Supplier Contracts and Timing of Price Fixations
Distinguish Between Hedging and Speculation
• Dont Over Hedge
• Be Disciplined and Consistent in the Approach and Policies of Strategies
• Consider a Dynamic Hedging Model to Take Advantage of Market Extremes
CLE (Please check the Detailed Credit Information page for states that have already been approved) ,ISM ,Additional credit may be available upon request. Contact Lorman at 866-352-9540 for further information.
Judith Ganes-J. Ganes Consulting
