by Michael Arbow, MBA
Partner, RSD Solutions Inc.
Recently RSD Solutions was in a discussion with individuals who encourage Canadian companies to export. At the meeting we discussed the idea of hedging the US dollar relative to the Canadian dollar. It was pointed out by our host that local firms and possibly many smaller Canadian firms do not hedge either currency or commodities because it is considered risky. Of course there are other reasons – the idea is seen as intimidating to some senior managers because of its sophistication but we will save that for another blog.
I pointed out to our host that hedging is a form of insurance much like automobile or house insurance but in a company’s case it is helping ensure the firm's very survival. When I pointed out that effectively what a CEO or CFO is saying by not hedging, is that buying insurance on their corporate survival is “risky”: an epiphany moment was reached in the room.
So my question is, is hedging considered risky at your firm and what do you think would be a recommended strategy for turning this perception around?
2 comments:
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The ability to retain customers is an important indicator of product success and commitment to developing long-term customer relationships.
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