Risk Management

Why manage currency risk

If your business buys from overseas suppliers, sells to international customers, or holds foreign currency assets, exchange rate movement affects your margin. A shift of a few percentage points can compress profitability, disrupt cash flow forecasts, or make a competitive bid unviable.

Where currency risk shows up

• Transaction risk — the gap between agreeing a price and settling a payment in a foreign currency.
• Economic risk — longer-term exchange rate shifts that affect competitiveness and pricing power.
• Translation risk — movements that create paper gains or losses when foreign operations are converted back into Canadian dollars.

Tools we use

Forward Contracts lock in today's exchange rate for a payment or receipt due 30 days to 12 months from now. This turns a variable cost or revenue into a fixed one and protects margin on the underlying deal.

Limit Orders let you target a preferred exchange rate. If the market reaches your rate during the order window, the conversion is booked automatically. Execution is not guaranteed — if the target rate is not reached before the order expires, the order closes with no conversion. Limit orders are often paired with a forward contract to protect a worst-case rate.

How we work with finance teams

1. Map currency exposure across payables, receivables and future revenue.
2. Agree a budget rate, hedge ratio and time horizon that reflect your risk appetite.
3. Execute the plan using spot conversions, forward contracts and limit orders as appropriate.
4. Review performance regularly and adjust as your business and the market evolve.