Accountability for Foreign Exchange Risk
Managing foreign exchange risk is becoming increasingly more difficult in our diverse global economy. Accounting managers must not only be aware of this risk, but proactively implement strategies to ensure that they do not experience foreign exchange risk exposure. After reading the article “Managing Foreign Exchange Risk,” discuss how managers should be held accountable for foreign exchange risk if they hold a static budget. Assuming the role of a manager, which strategies would you use to hedge against foreign exchange risk exposure? Discuss why you might choose these strategies in lieu of others.Assuming the role of a manager, which strategies would you use to hedge against foreign exchange risk exposure?
Goldberg, S. R., & Drogt, E. L. (2008). Managing foreign exchange risk. Journal of Corporate Accounting & Finance, 19(2), 49−57.