Hedging your Global Risk

In theory, hedging technics should help companies to protect themselves against some unexpected moves in FX, interest rates and commodity prices.

It is now possible to hedge against more risks using instruments such as weather derivatives, natural disaster derivatives and credit derivative.

Hedging strategies can be based on financial markets instruments such as futures, forwards, swaps, options, structured products or on operating and financial policies.

Either way, hedging strategy should reduce the volatility of future cash flows. In practice, however, results vary depending on the design, execution and timeliness of hedging.

Recently, academic research has revealed based on statistical study that the success or failure of a hedging strategy is influenced by the personalities of the individuals involved principally, those of the chief financial officer or treasurer and the timing of the execution which is often too late when it is executed.

Last but not least, a successful hedging strategy must be dynamic in function of the volatility of the markets and not static.

Recognizing the incidence of such above biases and taking action to prevent resulting mistakes may be the key to developing a successful hedging strategies

I can help you to build a coherent and efficient dynamic hedging strategy.