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Alexander Hamilton Awards

Restoring Health to an Ailing Balance Sheet Hedging Program

Congratulations to Medtronic for winning the 2022 Silver Alexander Hamilton Award in Risk Management!

Congratulations to Medtronic for winning the Silver Alexander Hamilton Award in Risk Management!

Minneapolis-based medical device manufacturer Medtronic has a straightforward, six-word mission: Alleviate pain, restore health, extend life.

That mission has served the company well. From its formation as the inventor and producer of the world’s first implantable pacemaker in the 1950s, Medtronic now makes devices that treat 70 different conditions, has sales in more than 150 countries, and does business in 60 currencies. However, as it grew into a global organization, its foreign exchange (FX) risk management processes began causing pain, not alleviating it.

Medtronic hedges balance sheet exposures in about 30 currencies. “We hedge to offset the risk to the balance sheet when one of our legal entities has a balance—monetary assets less liabilities—in a currency other than their functional currency,” explains Tim Husnik, senior treasury director. “For example, if a legal entity in Europe has balances in Swiss francs, we consider that to be a balance sheet exposure. If the balance in a given currency is significant, we consider hedging with derivatives. Overall, the program is about $5 billion in size.”

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Meg Waters

Meg Waters

Meg Waters is the editor in chief of Treasury & Risk. She is the former editor in chief of BPM Magazine and the former managing editor of Business Finance.

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