CFOs & CEO's Should Take More FX Risk… Sometimes.

How much do you currently spend each year buying certainty?

Take more risk..... a statement that will make many finance professionals uncomfortable.

Good.

When Interest rate differentials are low or positive, buying certainty is logical.

The decision is easy....Hedge....Protect the budget.

Move on.

So what if your company is not in that luxurious position.

Imagine you're the CFO of a European business with $50 million of annual US revenue.

If interest rate differentials mean a straightforward 12-month hedge costs around 1.5%, you've already committed around $750,000 before dealing spreads, hedge accounting, audit requirements, treasury administration and management time.

You've paid a lot for certainty before the exchange rate has moved by a single cent.

Here's my question.

If another supplier increased your costs by almost $1 million a year, would you simply accept the invoice?

Or would you challenge it?

That's exactly how CFOs should think about FX hedging.

When certainty is cheap, keep your strategy simple and spend your time elsewhere.

When certainty becomes expensive, spend more time on treasury—not less. 

If you dont have the time, find an expert you trust to help.

That doesn't mean speculating on currencies.

It means asking whether the business really needs to pay for 100% certainty, or whether accepting a measured amount of FX risk could materially reduce the total cost of managing that exposure.

The role of a CFO isn't to eliminate risk.

It's to make the best economic decision.

Sometimes...taking a little more FX risk is the right financial decision.