Recently Adam Stark, Director at Central FX, spoke to Ross McKenzie at Trade Finance Global magazine about the potential business risks and rewards in foreign exchange.

We hear news about large corporations facing losses resulting from FX volatility, or even after poor FX risk management decisions.

These challenges are even more common among SMEs, even if we are less likely to hear about them. Financial teams of many SME companies don’t have the in-depth knowledge of how to handle their currency exposures or properly run hedging strategies. Hedging mistakes can be easy to make and can be very costly.

They discussed 4 common hedging mistakes that plague many SME businesses who acknowledge the importance of hedging, but don’t have the expertise to execute it properly:

  1. Wrong evaluation of the exposure
  2. Lack of structured, long term hedging strategy
  3. Misunderstanding of hedging transactions goals and implications
  4. Inconsistent hedging strategy implementation

The full article including potential solutions to these issues can be found here.