Globally, firms saw lower earnings due to 'avoidable' forex risk: Report

Globally, a majority of Chief Financial Officers (CFOs) say their company suffered reduced earnings in the last two years due to "avoidable and unhedged" forex risk, according to HSBC report.

According to a global survey of 200 CFOs and nearly 300 treasurers, conducted by HSBC and FT Remark, 70 per cent of CFOs said their company experienced lower earnings due to avoidable and unhedged forex risk.

Besides, more than half of all CFOs believe forex is a risk their company is least well-placed to deal with.

These concerns mainly reflect the increasing volatility in currencies amid an uncertain macro-economic and geo-political outlook.

"The survey shows the importance of corporates having robust risk management frameworks in place given the financial risks of not getting it right, especially in an increasingly uncertain world," said Frederic Boillereau, Head of Global Forex & Commodities at HSBC.

The report further noted that digitalisation of treasury functions is seen as one trend that can help corporates deliver more effective risk management strategies.

Around 59 per cent of treasurers said digitalisation is expected to have a significant impact on risk management strategy in the next three years and 57 per cent say digitalisation is an area where they are keen to develop their team's expertise.

Moreover, "banks have a role to play in helping corporates fulfil their risk management aspirations, by offering comprehensive risk management solutions; developing new digital tools; and supplying strategic insight, underpinned by established local and global knowledge, said Rahul Badhwar, Head of Global Markets Corporate Services, Public Side at HSBC.