Last month, Chatham Financial released a benchmarkingreport on the state of financial risk management amongU.S.-based businesses. Chatham studied the Securities and ExchangeCommission (SEC) filings of more than 1,000 public companies withannual revenues between $500 million and $20 billion, excludingfinancial services and insurance companies, to determine how manyof these organizations incur currency, commodity, and interest raterisks, and how they mitigate those risks.110813_Chatham_Figure 1-v2

Many of these organizations have experienced a significantincrease in financial risks over the past decade, as they'veextended their operations abroad and as volatility has increased inglobal financial markets. Nevertheless, Chatham found that manycompanies with foreign exchange, interest rate, and/or commodityrisks on their financial statements are not using derivatives tohedge these risks (see Figure 1).

About half of organizations that have currency risk are hedgingtheir exposure; the Chatham report notes that this is “asurprisingly low percentage given the extreme volatility around thecurrencies to which the companies have exposure.” The majority ofcompanies that are hedging foreign exchange (FX) risk are using both balance sheetand cash flow hedges.­

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.