Introduction to Foreign Exchange (FX), Commodities and Derivatives

In an increasingly global economy the impact of foreign exchange rate movements on a company’s risk profile cannot be underestimated. The session starts with an overview of the financial impact of foreign exchange on a company. Participants explore risks and opportunities of foreign exchange and how they are presented in a company's accounts. It also covers which areas fall into operating decisions and which into financing decisions. A further module covers the commodities market and how commodities' volatility can impact costs. During the final part of the session, participants will be introduced to the basic forms of derivatives and how a company can use these to effectively manage its risk profile.

• Types of risk
  • Accounting - translating the profit/loss of foreign subsidiaries for domestic purposes
  • Direct - actual monies received once receipt or cost is exchanges for domestic currency
  • Import/export strength

• Overview of the foreign exchange and commodities markets
• How fx volatility can impact company’s revenues and costs
• Explore whether the impact can get passed on to the company's customers

• Basic forms of derivatives:
  • Forward contracts
  • Swaps
  • Options
  • Effects on the risk profile of a company