Insights
The CFO’s FX Playbook: A Practical Guide to Managing Currency Risk
27 October 2026 · Universal Partners · 8-minute read
Currency volatility is a key part of international business and can pose a considerable risk, hurting the company’s profitability, cash flow, balance-sheet values and market competitiveness. As Chairman and CEO of EXL Rohit Kapoor states, “Currency risk is one of the most important issues that we deal with,” and “Unfortunately, we learned that the hard way.”
In an economic environment where tariff policy changes, inflation and FX volatility are a reality, it is increasingly necessary that organisations operating in the international space have a solid and sophisticated risk management framework in place.
Chief Financial Officers (CFOs) at the helm of a global firm are very often faced with the challenge of managing foreign exchange (FX) risk effectively, protecting their organisations and managing their organisations' exposure to unpredictable currency movements. Now, more than ever, CFOs have a more demanding role to shape the financial strategy and steer their organisation through uncertainty.
If you are a CFO overseeing an international business, then you are aware that foreign exchange is not simply monitoring exchange rates, but being extremely attuned to the many ways currency fluctuations can significantly impact your firm’s revenue, margins and costs as well as the ability to speculate on financial performance.
While all of this sounds great on paper, it very often remains just that, with FX risk being managed reactively instead of strategically. We have seen again and again finance teams struggling last minute to respond to an imminent payment, reacting to an unexpected sharp currency movement or having to make a late decision following forecast changes.
According to PwC’s 2025 Global Treasury Survey, 83% of 350 treasurers from around the world highlighted FX risk as their most critical economic exposure, followed by interest rate (72%) and commodity-price exposures (39%). Meanwhile, 36% reported that they still use manual processes in FX exposure management. While identifying currency exposure is becoming a strategic treasury responsibility, the statistics reveal that many organisations are still relying on manual processes or in-house developed systems that could delay the timeliness, precision and auditability of risk insights.
For CFOs, the objective then is to move away from fragmented risk practices to a more integrated approach that encompasses forecasting, hedging and exposure visibility. By understanding the kind of exposure a business faces to determining how much uncertainty it can tolerate, and, finally, building a framework for managing that exposure, CFOs will strengthen operational resilience while making FX risk management an essential component of financial discipline.
In this article, we highlight key steps CFOs can take in strengthening their approach to managing FX risk.
Mapping your FX exposure
The first step in FX risk management is to understand where and how currency exposure enters the business. While currency volatility is what creates opportunities and is the lifeblood of markets, it poses a constant risk that many times cannot be eliminated, but it can be definitely managed. Mitigating risk and loss is a strategy that first begins with an understanding of how currency fluctuations can impact business operations.
Currency exposure can arise through a variety of international transactions including foreign-currency sales, international suppliers, payroll in different currencies, overseas subsidiaries, intercompany transactions, debt in foreign-currency, cross-border acquisitions, foreign-currency cash balances, forecast revenues and expenses, as well as investments and other assets denominated in foreign currencies.
According to the global standards for successful treasury set out by the Association of Corporate Treasurers (ACT), financial management including valuing and managing FX risks is a core aspect of a treasury’s role. Treasurers, the ACT notes, must have a detailed understanding of the implications of external events on their organisation, the risks of transacting financial products as well as a risk management framework that expresses the risk appetite of the organisation.
If, for example, a company reports revenue in GBP but sells extensively into the Eurozone, the customers pay in EUR but the company's main costs are in GBP, a change in EUR/GBP can impact the Sterling value of those revenues. Similarly, a British company purchasing goods from a US supplier could have a USD liability even before the invoice becomes payable.
