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JKL makes large export sales to customers in country X, whose currency fluctuates significantly against JKL's home currency JKL also makes large purchases from suppliers in countrrOC All of these transactions are in country X's currency
JKL's treasurer does not actively hedge currency risks because there is a natural hedge in place due to the company making both sales and purchases in the same currency
JKL's board has instructed the treasurer to put active hedging measures in place because the risk report would otherwise have to disclose the fact that JKL has a currency risk which is not actively hedged
Which of the following statements are correct? Select ALL that apply.
Suggested Answer: A, C, D
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32 comments · newest first
GI
Giovanna
11 months ago
Not sure if risk reporting is a bad thing, though.
TY
Ty
11 months ago
I think the board just wants to avoid blame.
JU
Juan
11 months ago
Wait, is risk reporting really that impactful?
AH
Ahmed
12 months ago
Totally agree, the board's just covering their backs!
CA
Cathrine
12 months ago
Risk reports can definitely change behavior.
WA
Wava
1 year ago
D seems accurate too; the board likely wants to avoid any blame for overlooking risks, especially with the pressure from the treasurer.
QU
Queenie
1 year ago
I think C makes sense because if the board doesn't hedge, they might face criticism from stakeholders, right?
CE
Cecil
1 year ago
I'm not sure about B; I feel like risk reporting is generally seen as a positive thing, but maybe it depends on the context?
RO
Roslyn
1 year ago
I remember discussing how risk reports can influence management decisions, so I think A is definitely correct.
CA
Cary
1 year ago
I agree. The risk reporting seems to be the main reason the board is instructing the treasurer to implement active hedging measures.
VI
Vivan
1 year ago
Exactly. The board is likely concerned about potential criticism if they don't take action to mitigate the risk, even though there's a natural hedge in place.
ER
Erasmo
1 year ago
The risk report is the driving factor here. The board wants to avoid having to disclose the currency risk that isn't being actively managed.
NE
Nelida
1 year ago
Okay, let's break this down. The company has a natural hedge in place, but the board wants to implement active hedging measures. I think the key is understanding why they want to do that.
CA
Camellia
1 year ago
This question seems straightforward, but I want to make sure I understand the key points before selecting my answers.
KA
Kathryn
1 year ago
Wait, which LSA types are actually permitted in totally stubby areas? I'm a bit fuzzy on the details here.
TI
Tish
1 year ago
Okay, let me see... CloudFormation is used for provisioning and managing AWS resources, so I'm thinking the answer is probably related to that. I'll eliminate the options that don't sound right.
DE
Delmy
2 years ago
I think the board does not want to be blamed for ignoring a risk, so they are right to instruct the treasurer to put active hedging measures in place.
DU
Dudley
2 years ago
I believe risk reports can change behavior, so it's crucial for the board to take action.
AN
Annmarie
2 years ago
C and D seem like the right answers here. The board wants to avoid any potential criticism or blame for not addressing a known risk.
CL
Claudio
2 years ago
Well, the board is just doing their job by ensuring currency risks are actively managed. Wouldn't want them to get in trouble for not being 'risk-aware' enough.
LO
Lorenza
2 years ago
C) The board may be concerned it will be criticised if it does not hedge
MO
Moira
2 years ago
A) Risk reports can change behaviour
SA
Santos
2 years ago
I agree with Beckie. Risk reporting is important for transparency.
JA
Janine
2 years ago
Hah, the board is worried about the optics of not hedging. Gotta love how risk management can be more about impression management sometimes.
CA
Carri
2 years ago
Risk reporting is essential for good governance, but it shouldn't be the sole driver of risk management. The board is just trying to be proactive here.
NI
Nichelle
2 years ago
C) The board may be concerned it will be criticised if it does not hedge
FR
Francesco
2 years ago
A) Risk reports can change behaviour
HE
Hermila
2 years ago
The board wants to cover their own backs by putting active hedging measures in place. I guess they don't want to be the scapegoats if something goes wrong.
KI
Kiera
2 years ago
D) The board does not want to be blamed for ignoring a risk.
FR
Frank
2 years ago
C) The board may be concerned it will be criticised if it does not hedge
GA
Galen
2 years ago
A) Risk reports can change behaviour
BE
Beckie
2 years ago
I think the board may be concerned it will be criticised if it does not hedge.