Page 13 - SCS May 2018 - Day 2 Tasks

Chapter 9

RISK MANAGEMENT (P3) PRACTICE

TASKS

EXERCISE 1

UPDATE

You receive the following email from Martine Andels, Director of Finance at Couchweb:

TRIGGER

Email

To: Senior Manager
From: Martine Andels
Subject: Currency Risk

As you are probably aware, we have been using various forms of hedging to help mitigate our
currency risk. There has been a request from a major shareholder - who was concerned currency
risk was not mentioned in the extract from our risk report - for us to present, at the next
shareholder meeting, how we deal with all currency risk: Translation, transaction and economic
risk. The Board would like to prepare for this and discuss it at their next meeting and they would
like some information. I would compile it myself but I have to meet with the external auditors
again.

Can you please draft me a document that briefly describes the differences between the three
types of currency risk and how they could be mitigated (if appropriate for Couchweb).
We don’t need complicated explanations on how to mitigate each of these risks or how hedging
works. Simpler explanations will do at this stage.

Just an email back to me is needed. I can then turn it into the format the Board is looking for and
present it. However, it does need to be done quickly as they are meeting with the key
shareholders at the end of the month and need to be prepared well in advance. Can you get back
to me by the end of today please?

Many thanks

KAPLAN PUBLISHING 27