Currency Risk Management Case Study

The goal of this case is to help Sandra Meyer develop a presentation to address Henry Bosse’s concerns about international investments. The general idea is to demonstrate to Henry the benefits of international diversification, if any. To achieve this goal, you need to have a view on 1) the impact of foreign exchange (FX) rates on the return and risk of international investments, and 2) the impact of having more assets on the return and risk of the investment portfolio To form views on these two points, answer the following questions: I. The impact of FX rates on the risk and return of foreign investments 1a) Using data in Appendix A, calculate the

mitigation strategy for each risk. Kaplan and Mikes (2010) noted in the case study that Lee explained

Check we are fulfilling health and safety policies and risk assessment appropriately, keep them up to date and modify them whenever it is necessary.

I do it by ensuring the risk assessment is in place and that I follow all the policies and procedures to minimise the risk as far as possible

You will look at the protecting factor which is a factor that will reduce the risk and help stop the risk becoming a reality. It 's not about getting rid of the risk but helping people to understand the potential consequences and risks that come with day to day living and using the protecting factors to reduce them as much as possible.

A currency exposure is any business operation whose profitability can be impacted by a currency exchange rate fluctuation.

The second step is to determine if the risk are from human nature or from natural causes, if they are from human nature it is important to find out if there are any ways to eliminate or at least mitigate the risk and if the company can do it what would be the cost.

Although some risks can be predicted and prepared for pre-emptively, there are always random variables and unknown factors which make it hard to predict the outcomes with certain precision. While the preferable course of action is to prevent these risks from arising in the first place, it should be accepted that certain risks will always exist and will need to be corrected accordingly instead of ignoring the issue completely.

Create a professional report detailing the information above as an initial draft of the risk

- Immediately carry out risk assessment, act on the identified risks and communicate the outcomes to the staff;

4. Develop preventative actions to prevent the risk from occurring, or contingent actions to reduce the risk of occurring.

AIFS is an American based company that offers travel abroad and exchange study services to both college and high school students. While AIFS’s revenues are denominated in American Dollars (USD), most of their costs are in foreign currencies as Euros (EUR) and British Pounds (GBP). Consequently, foreign exchange hedging has a crucial importance for the company because it provides protection against different types of risk that derive from its activity.

The use of CRM could also be used to target specific marketing programs for individual customers. It will help the company evaluate its customers, which in turn will aid Canyon Ranch in developing features, products or services that will suit clients’ preferences. The

Nestlé S.A. is a Swiss company and owns a prestigious position being the world’s leading nutrition, health and wellness group (Nestlé, 2016). According to its annual report (2015), this company is exposed to many risks caused by movements in foreign currency exchange rates, interest rate and market prices. The foreign exchange risk comes from transactions and translations of foreign operations in Swiss Francs (CHF). The interest rate risk faces the borrowings at fixed and variable rates. The market price risk comes from commodity price and equity price. The former risk arises from world commodity market for the supplies of coffee, cocoa beans, sugar and others. The later risk arises from the fluctuations of the prices of investments held. (Nestle annual reports, 2015). Thus, financial derivatives instruments are used by this multinational corporation in order to hedge these risks.

Aspen has become a public company with more risk adverse investors who want to invest in the core business of the firm and not assume any foreign exchange risk. Foreign exchange risk is a core risk to Aspen’s business because they have many customers outside of the United States. We believe that transferring this risk to the customers would limit Aspen’s growth on the foreign markets: Aspen should keep its current marketing strategy, which includes credit installment payments and payments in local currencies for Japan, the UK and Germany. The current risk management program hurts the company because it doesnot consider Aspen’s expenses abroad that balance sales exposures to currency fluctuations. We then recommend that