How to Communicate to a Board Regarding Hedging Risk with Derivatives?
MINNEAPOLIS, MN | February 24, 2023 |By: John Trefethen, Director and Co-Founder
What messaging should be communicated to a board regarding hedging risk with derivatives?
Hedging is for preventing an existing risk from impacting earnings
Hedging is not speculation
Hedging is an exercise to manage market volatility
Hedging offers protection against undesired market fluctuations
Hedging is an activity taken on by institutions that are risk adverse
Not hedging is speculating
Being sure that a board understands what hedging is, and is not, is the first step in preparing them to make an informed decision about hedging.
HedgeStar can guide companies wherever they start in the hedging lifecycle. Providing support from risk governance, systems, accounting and special projects.
What to learn more about hedging risk with derivatives? Contact HedgeStar today:
Contact the author:
John Trefethen co-founded HedgeStar (formerly DerivActiv) in 2004. John has 30 years of experience in capital markets where he has held various positions related to institutional debt issuance, executing hedging strategies, and designing and implementing derivative reporting solutions. John has presented to numerous industry groups on various topics related to hedging financial risk, and accounting for derivatives.
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HedgeStar supports hedging programs for Interest Rates I Currencies I Commodities