In summer 2006, CitiFX conducted their second corporate risk management study and received a much higher number of responses than last year. Their findings include:
- Hedging activities continue to be focused on hedging transactional cash flows.
- Twelve-months is the most common maximum tenor for hedging forecasted transactions. However, the regional breakdown reveals a different picture.
- Forward contracts continue to be the hedge instrument of choice. Options, however, seem to be used more frequently than previously thought.
- While minimizing earnings volatility is the most frequently cited main risk management objective, precisely defining the concept is not as easy as one thinks.
- Most North American & European companies make hedging decisions and execute hedge centrally while Asia-Pacific participants show a much higher propensity to utilize a decentralized structure for risk management.
- Market view and interest rate differential influence hedging activities much more than one might expect.
