X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

In a complex and interconnected world, risks are everywhere. Companies that fail to effectively mitigate the highest-impact risks may find they wreak havoc on financial projections, budgets, and the company’s ability to meet stakeholder expectations. A recent Citizens Commercial Bank Risk Management Study of 350 U.S. publicly listed companies revealed how widespread these risks are: 78 percent of respondents said their organization is exposed to interest rate risk, 74 percent to foreign exchange (FX) risk, and just under 50 percent to commodity risk. Yet only about half of these companies are adequately managing their risk exposures, which hurts their planning processes.

Risk exposures vary by industry. For example, companies in the healthcare, industrials, and materials sectors are capital-intensive and are traditionally heavier borrowers, relatively speaking. As a result, companies in these sectors are much more exposed to changes in interest rates over time. (See Figure 1.)

The size of a company’s exposure to FX risk generally depends on how much of its business is transacted overseas vs. domestically. But other factors can come into play. The U.S. energy sector, for example, is protected from FX risk because international oil and refined products, such as gasoline and diesel, are traded in U.S. dollars at the wholesale level.

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

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • 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 PropertyCasualty360.com and Law.com.

Already have an account?

 

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2022 ALM Global, LLC. All Rights Reserved.